TransUnion (NYSE: TRU) (the “Company”) today announced financial
results for the quarter ended September 30, 2019.
Revenue:
- Total revenue was $689 million, an
increase of 14 percent (15 percent on a constant currency basis, 14
percent on an organic constant currency basis) compared with the
third 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 also
$689 million, an increase of 11 percent (12 percent on a constant
currency basis, 11 percent on an organic constant currency basis,
12 percent on an organic constant currency basis excluding last
year’s incremental credit monitoring revenue due to a breach at a
competitor) compared with the third quarter of 2018.
Earnings:
- Net income attributable to
TransUnion was $92 million, compared with $46 million for the third
quarter of 2018. Diluted earnings per share was $0.48, compared
with $0.24 for the third quarter of 2018.
- Adjusted Net Income was $146
million, compared with $125 million for the third quarter of
2018. Adjusted Diluted Earnings per Share was $0.76, compared
with $0.65 for the third quarter of 2018.
- Adjusted EBITDA was $281 million,
an increase of 15 percent (16 percent on a constant currency basis,
15 percent on an organic constant currency basis) compared with the
third quarter of 2018. Adjusted EBITDA margin was 40.7 percent,
compared with 39.4 percent for the third quarter of 2018.
“TransUnion delivered another strong quarter
with double-digit organic constant currency Adjusted Revenue,
Adjusted EBITDA and Adjusted EPS growth in the quarter,” said Chris
Cartwright, President and CEO. “The results reflect the
high-performance culture of the TransUnion team as well as our
array of advantaged data assets, capabilities and technology
infrastructure. We continue to aggressively invest in all of
these areas to maintain our leadership position in the
industry.”
“Our strong performance has also afforded us the
opportunity to prepay another $165 million of debt, bringing our
total prepayments to $265 million for the year, and $325 million
over the past twelve months. We were able to do this even as we
invested in the business, participated in strategic M&A, and
paid our quarterly dividends over this time.”
Third Quarter 2019 Segment Results
U.S. Markets
U.S. Markets revenue was $420 million, an
increase of 12 percent (11 percent on an organic basis) compared
with the third quarter of 2018.
- Financial Services revenue was $225 million, an increase of 13
percent (13 percent on an organic basis) compared with the third
quarter of 2018.
- Emerging Verticals revenue, which includes Healthcare,
Insurance and all other verticals, was $195 million, an increase of
11 percent (8 percent on an organic basis) compared with the third
quarter of 2018.
Adjusted EBITDA was $181 million, an increase of
18 percent (18 percent on an organic basis) compared with the third
quarter of 2018.
International
International revenue was $160 million, an
increase of 24 percent (28 percent on a constant currency basis)
compared with the third quarter of 2018. International Adjusted
Revenue was also $160 million, an increase of 10 percent (14
percent on a constant currency basis) compared with the third
quarter of 2018 Adjusted Revenue.
- Canada revenue was $27 million, an increase of 11 percent (12
percent on a constant currency basis) compared with the third
quarter of 2018.
- Latin America revenue was $26 million, an increase of 8 percent
(13 percent on a constant currency basis) compared with the third
quarter of 2018.
- United Kingdom revenue was $48 million. Adjusted Revenue was
also $48 million, an increase of 6 percent (12 percent on a
constant currency basis) compared with the third quarter of 2018
Adjusted Revenue.
- Africa revenue was $16 million, an increase of 2 percent (7
percent on a constant currency basis) compared with the third
quarter of 2018.
- India revenue was $27 million, an increase of 33 percent (34
percent on a constant currency basis) compared with the third
quarter of 2018.
- Asia Pacific revenue was $16 million, an increase of 1 percent
(also 1 percent on a constant currency basis) compared with the
third quarter of 2018.
Adjusted EBITDA was $64 million, an increase of
12 percent (16 percent on a constant currency basis) compared with
the third quarter of 2018.
Consumer Interactive
Consumer Interactive revenue was $128 million,
an increase of 7 percent compared with the third quarter of
2018.
Adjusted EBITDA was $67 million, an increase of
10 percent compared with the third quarter of 2018.
July Fraud Incident
In early July 2019, we determined that
TransUnion Limited, a Hong Kong entity that is included in our
International segment and in which we hold a 56.25 percent
interest, was the victim of criminal fraud (the “Fraud Incident”).
The Fraud Incident involved employee impersonation and fraudulent
requests targeting TransUnion Limited, which resulted in a series
of fraudulently-induced unauthorized wire transfers totaling $17.8
million in early July 2019 that is included in other income and
(expense), net, on our Consolidated Statements of Income. In
addition, through September 30, 2019, we have incurred $1.8 million
of administrative expenses investigating the Fraud Incident and
enhancing our controls that is included in selling, general and
administrative expenses, for a total of $19.7 million that is
included in income before income taxes. The tax benefit of these
expenses was $3.3 million, for a net after tax loss of $16.4
million, of which $7.1 million is attributable to the
non-controlling interest and $9.3 million is attributable to
TransUnion. There was no impact on Adjusted EBITDA or Adjusted Net
Income as the net impact of the Fraud Incident was added back to
these non-GAAP financial measures as presented in the tables
below.
Liquidity and Capital Resources
Cash and cash equivalents were $236 million at
September 30, 2019 and $187 million at December 31, 2018.
Total debt, including the current portion of long-term debt, was
$3,740 million at September 30, 2019 and $4,048 million at
December 31, 2018.
For the nine months ended September 30, 2019
cash provided by continuing operations was $588 million compared
with $410 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
$155 million compared with $1,927 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 $132 million
compared with $118 million in 2018. Cash used in financing
activities was $373 million compared with a source of cash of
$1,634 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 $265 million of
prepayments made on our outstanding debt in 2019, $38 million of
cash used to pay employee withholding taxes on restricted stock
that vested during the year 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 $2.644 billion and $2.649 billion, an increase of 13
percent compared with 2018. Adjusted EBITDA is expected to be
between $1.048 billion and $1.052 billion, an increase of 14 to 15
percent. Adjusted Diluted Earnings per Share is expected to be
between $2.74 and $2.76, an increase of 10 percent. Adjusted
Diluted Earnings per Share guidance includes an approximate $0.04
per share headwind from unfavorable foreign exchange rates and an
approximate $0.14 per share headwind from the full year impact of
higher interest expenses related to the additional debt for
acquisitions completed in June 2018 and higher LIBOR rates in 2019
compared with 2018.
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 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 Fourth Quarter Outlook
For the fourth quarter of 2019, Adjusted Revenue
is expected to be between $667 million and $672 million, an
increase of 7 to 8 percent compared with the fourth quarter of
2018. Adjusted EBITDA is expected to be between $264 million and
$268 million, an increase of 6 to 8 percent. Adjusted Diluted
Earnings per Share is expected to be between $0.69 and $0.71, an
increase of 5 to 7 percent. Adjusted Diluted Earnings per Share
includes an approximate $0.01 headwind in total from unfavorable
foreign exchange rates.
The Adjusted Revenue guidance includes
approximately 50 basis points of growth from acquisitions that
closed in the current year. Adjusted Revenue and Adjusted EBITDA
include approximately 100 basis points of headwind from foreign
exchange rates. 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.
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. Beginning in the
third quarter of 2019, we no longer have these adjustments to
revenue. 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)
|
|
September 30, 2019 |
|
December 31, 2018 |
|
|
(Unaudited) |
|
|
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
235.9 |
|
|
$ |
187.4 |
|
Trade accounts receivable, net of allowance of $18.8 and $13.5 |
|
458.2 |
|
|
456.8 |
|
Other current assets |
|
198.0 |
|
|
136.5 |
|
Current assets of discontinued operations |
|
— |
|
|
60.8 |
|
Total current assets |
|
892.1 |
|
|
841.5 |
|
Property, plant and equipment,
net of accumulated depreciation and amortization of $430.6 and
$366.2 |
|
201.8 |
|
|
220.3 |
|
Goodwill |
|
3,312.6 |
|
|
3,293.6 |
|
Other intangibles, net of
accumulated amortization of $1,405.3 and $1,206.7 |
|
2,381.0 |
|
|
2,548.1 |
|
Other assets |
|
234.5 |
|
|
136.3 |
|
Total
assets |
|
$ |
7,022.0 |
|
|
$ |
7,039.8 |
|
Liabilities and
stockholders’ equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Trade accounts payable |
|
$ |
174.5 |
|
|
$ |
169.9 |
|
Short-term debt and current portion of long-term debt |
|
93.9 |
|
|
71.7 |
|
Other current liabilities |
|
359.7 |
|
|
284.1 |
|
Current liabilities of discontinued operations |
|
— |
|
|
22.8 |
|
Total current liabilities |
|
628.1 |
|
|
548.5 |
|
Long-term debt |
|
3,646.0 |
|
|
3,976.4 |
|
Deferred taxes |
|
442.0 |
|
|
478.0 |
|
Other liabilities |
|
176.4 |
|
|
54.7 |
|
Total
liabilities |
|
4,892.5 |
|
|
5,057.6 |
|
Stockholders’ equity: |
|
|
|
|
Common stock, $0.01 par value; 1.0 billion shares authorized at
September 30, 2019 and December 31, 2018, 193.2 million and
190.0 million shares issued at September 30, 2019 and
December 31, 2018, respectively, and 188.3 million shares
and 185.7 million shares outstanding as of September, 2019 and
December 31, 2018, respectively |
|
1.9 |
|
|
1.9 |
|
Additional paid-in capital |
|
1,999.7 |
|
|
1,947.3 |
|
Treasury stock at cost; 4.8 million and 4.2 million shares at
September 30, 2019 and December 31, 2018, respectively |
|
(177.9 |
) |
|
(139.9 |
) |
Retained earnings |
|
583.4 |
|
|
363.1 |
|
Accumulated other comprehensive loss |
|
(369.7 |
) |
|
(282.7 |
) |
Total TransUnion stockholders’
equity |
|
2,037.4 |
|
|
1,889.7 |
|
Noncontrolling interests |
|
92.1 |
|
|
92.5 |
|
Total stockholders’
equity |
|
2,129.5 |
|
|
1,982.2 |
|
Total liabilities and
stockholders’ equity |
|
$ |
7,022.0 |
|
|
$ |
7,039.8 |
|
TRANSUNION AND
SUBSIDIARIESConsolidated Statements of Income
(Unaudited)(in millions, except per share data)
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
689.3 |
|
|
$ |
603.6 |
|
|
$ |
1,970.5 |
|
|
$ |
1,704.1 |
|
Operating
expenses |
|
|
|
|
|
|
|
|
Cost of services (exclusive of depreciation and amortization
below) |
|
220.8 |
|
|
207.5 |
|
|
645.2 |
|
|
579.0 |
|
Selling, general and administrative |
|
208.4 |
|
|
189.8 |
|
|
600.8 |
|
|
524.6 |
|
Depreciation and amortization |
|
88.7 |
|
|
84.2 |
|
|
271.4 |
|
|
218.8 |
|
Total operating
expenses |
|
518.0 |
|
|
481.5 |
|
|
1,517.4 |
|
|
1,322.3 |
|
Operating
income |
|
171.3 |
|
|
122.1 |
|
|
453.1 |
|
|
381.7 |
|
Non-operating income
and (expense) |
|
|
|
|
|
|
|
|
Interest expense |
|
(43.5 |
) |
|
(44.0 |
) |
|
(133.7 |
) |
|
(92.5 |
) |
Interest income |
|
2.2 |
|
|
1.3 |
|
|
5.4 |
|
|
3.5 |
|
Earnings from equity method investments |
|
3.1 |
|
|
3.2 |
|
|
10.2 |
|
|
8.4 |
|
Other income and (expense), net |
|
(20.6 |
) |
|
(3.2 |
) |
|
(0.7 |
) |
|
(45.6 |
) |
Total non-operating
income and (expense) |
|
(58.8 |
) |
|
(42.7 |
) |
|
(118.7 |
) |
|
(126.1 |
) |
Income from continuing
operations before income taxes |
|
112.5 |
|
|
79.4 |
|
|
334.3 |
|
|
255.6 |
|
Provision for income
taxes |
|
(24.2 |
) |
|
(28.6 |
) |
|
(64.2 |
) |
|
(72.1 |
) |
Income from continuing
operations |
|
88.3 |
|
|
50.8 |
|
|
270.2 |
|
|
183.5 |
|
Discontinued
operations, net of tax |
|
— |
|
|
(1.4 |
) |
|
(4.6 |
) |
|
(1.4 |
) |
Net
income |
|
88.3 |
|
|
49.4 |
|
|
265.6 |
|
|
182.0 |
|
Less: net (income)
loss attributable to the noncontrolling interests |
|
3.4 |
|
|
(3.1 |
) |
|
(1.5 |
) |
|
(7.6 |
) |
Net income
attributable to TransUnion |
|
$ |
91.7 |
|
|
$ |
46.3 |
|
|
$ |
264.1 |
|
|
$ |
174.4 |
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations |
|
$ |
88.3 |
|
|
$ |
50.8 |
|
|
$ |
270.2 |
|
|
$ |
183.5 |
|
Less: income from
continuing operations attributable to noncontrolling
interests |
|
3.4 |
|
|
(3.1 |
) |
|
(1.5 |
) |
|
(7.6 |
) |
Income from continuing
operations attributable to TransUnion |
|
91.7 |
|
|
47.7 |
|
|
268.7 |
|
|
175.9 |
|
Discontinued
operations, net of tax |
|
— |
|
|
(1.4 |
) |
|
(4.6 |
) |
|
(1.4 |
) |
Net income
attributable to TransUnion |
|
$ |
91.7 |
|
|
$ |
46.3 |
|
|
$ |
264.1 |
|
|
$ |
174.4 |
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share from: |
|
|
|
|
|
|
|
|
Income from continuing operations attributable to TransUnion |
|
$ |
0.49 |
|
|
$ |
0.26 |
|
|
$ |
1.43 |
|
|
$ |
0.95 |
|
Discontinued operations, net of tax |
|
— |
|
|
(0.01 |
) |
|
(0.02 |
) |
|
(0.01 |
) |
Net Income attributable to TransUnion |
|
$ |
0.49 |
|
|
$ |
0.25 |
|
|
$ |
1.41 |
|
|
$ |
0.95 |
|
Diluted earnings per
common share from: |
|
|
|
|
|
|
|
|
Income from continuing operations attributable to TransUnion |
|
$ |
0.48 |
|
|
$ |
0.25 |
|
|
$ |
1.40 |
|
|
$ |
0.92 |
|
Discontinued operations, net of tax |
|
— |
|
|
(0.01 |
) |
|
(0.02 |
) |
|
(0.01 |
) |
Net Income attributable to TransUnion |
|
$ |
0.48 |
|
|
$ |
0.24 |
|
|
$ |
1.38 |
|
|
$ |
0.91 |
|
Weighted-average
shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
188.2 |
|
|
185.1 |
|
|
187.5 |
|
|
184.4 |
|
Diluted |
|
192.0 |
|
|
191.2 |
|
|
191.6 |
|
|
190.8 |
|
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)
|
|
Nine Months Ended September 30, |
|
|
2019 |
|
2018 |
Cash flows from operating
activities: |
|
|
|
|
Net income |
|
$ |
265.6 |
|
|
$ |
182.0 |
|
Add: loss from discontinued operations, net of tax |
|
4.6 |
|
|
1.4 |
|
Income from continuing operations |
|
270.2 |
|
|
183.5 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization |
|
271.4 |
|
|
218.8 |
|
Loss on debt financing transactions |
|
1.5 |
|
|
12.0 |
|
Amortization and (gain) loss on fair value of hedge instrument |
|
— |
|
|
(0.7 |
) |
Net (gain) impairment of investments in nonconsolidated affiliates
and assets-held-for-sale |
|
(20.6 |
) |
|
1.5 |
|
Equity in net income of affiliates, net of dividends |
|
(1.2 |
) |
|
(3.1 |
) |
Deferred taxes |
|
(9.7 |
) |
|
(17.9 |
) |
Amortization of discount and deferred financing fees |
|
4.7 |
|
|
3.2 |
|
Stock-based compensation |
|
29.7 |
|
|
36.9 |
|
Payment of contingent obligation |
|
(0.4 |
) |
|
(0.2 |
) |
Provision for losses on trade accounts receivable |
|
7.9 |
|
|
6.3 |
|
Other |
|
2.8 |
|
|
3.0 |
|
Changes in assets and liabilities: |
|
|
|
|
Trade accounts receivable |
|
(13.2 |
) |
|
(79.4 |
) |
Other current and long-term assets |
|
(35.4 |
) |
|
(5.5 |
) |
Trade accounts payable |
|
10.8 |
|
|
8.3 |
|
Other current and long-term liabilities |
|
69.2 |
|
|
43.6 |
|
Cash provided by
operating activities of continuing operations |
|
587.7 |
|
|
410.3 |
|
Cash used in operating activities
of discontinued operations |
|
(7.3 |
) |
|
(0.9 |
) |
Cash provided by
operating activities |
|
580.4 |
|
|
409.4 |
|
Cash flows from investing
activities: |
|
|
|
|
Capital expenditures |
|
(132.1 |
) |
|
(118.3 |
) |
Proceeds from sale of trading securities |
|
3.5 |
|
|
1.8 |
|
Purchases of trading securities |
|
(1.9 |
) |
|
(2.0 |
) |
Proceeds from sale of other investments |
|
18.2 |
|
|
15.9 |
|
Purchases of other investments |
|
(31.4 |
) |
|
(22.7 |
) |
Acquisitions and purchases of noncontrolling interests, net of cash
acquired |
|
(46.2 |
) |
|
(1,800.4 |
) |
Proceeds from disposals of discontinued operations, net of cash on
hand |
|
40.3 |
|
|
(0.5 |
) |
Other |
|
(5.5 |
) |
|
(0.9 |
) |
Cash used in investing
activities of continuing operations |
|
(155.1 |
) |
|
(1,927.1 |
) |
Cash used in investing activities
of discontinued operations |
|
— |
|
|
(0.1 |
) |
Cash used in investing
activities |
|
(155.1 |
) |
|
(1,927.2 |
) |
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 |
|
— |
|
|
(210.0 |
) |
Repayments of debt |
|
(313.9 |
) |
|
(39.3 |
) |
Debt financing fees |
|
— |
|
|
(33.8 |
) |
Proceeds from issuance of common stock and exercise of stock
options |
|
22.4 |
|
|
23.3 |
|
Dividends to shareholders |
|
(42.6 |
) |
|
(27.7 |
) |
Distributions to noncontrolling interests |
|
(1.2 |
) |
|
(2.8 |
) |
Employee taxes paid on restricted stock units recorded as treasury
stock |
|
(37.7 |
) |
|
(0.8 |
) |
Cash (used in) provided
by financing activities |
|
(373.0 |
) |
|
1,633.9 |
|
Effect of exchange rate changes
on cash and cash equivalents |
|
(3.8 |
) |
|
(5.3 |
) |
Net change in cash and cash
equivalents |
|
48.5 |
|
|
110.8 |
|
Cash and cash equivalents,
beginning of period |
|
187.4 |
|
|
115.8 |
|
Cash and cash
equivalents, end of period |
|
$ |
235.9 |
|
|
$ |
226.6 |
|
As a result of displaying amounts in millions,
rounding differences may exist in the table above.
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 September 30, 2019 compared with the
Three Months Ended September 30, 2018 |
|
|
Reported |
|
CC Growth(2) |
|
Inorganic(1,3) |
|
Organic Growth(4) |
|
Organic CC Growth(5) |
Revenue: |
|
|
|
|
|
|
|
|
|
|
Consolidated(1) |
|
14.2 |
% |
|
15.1 |
% |
|
0.9 |
% |
|
13.3 |
% |
|
14.2 |
% |
U.S. Markets |
|
12.1 |
% |
|
12.1 |
% |
|
1.4 |
% |
|
10.7 |
% |
|
10.8 |
% |
Financial Services |
|
12.9 |
% |
|
12.9 |
% |
|
— |
% |
|
12.9 |
% |
|
12.9 |
% |
Emerging Verticals |
|
11.3 |
% |
|
11.3 |
% |
|
2.9 |
% |
|
8.3 |
% |
|
8.4 |
% |
International(1) |
|
24.3 |
% |
|
28.3 |
% |
|
— |
% |
|
24.3 |
% |
|
28.3 |
% |
Canada |
|
10.9 |
% |
|
11.9 |
% |
|
— |
% |
|
10.9 |
% |
|
11.9 |
% |
Latin America |
|
7.5 |
% |
|
13.4 |
% |
|
— |
% |
|
7.5 |
% |
|
13.4 |
% |
United Kingdom(1) |
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
Africa |
|
2.4 |
% |
|
7.3 |
% |
|
— |
% |
|
2.4 |
% |
|
7.3 |
% |
India |
|
33.0 |
% |
|
33.7 |
% |
|
— |
% |
|
33.0 |
% |
|
33.7 |
% |
Asia Pacific |
|
1.4 |
% |
|
0.6 |
% |
|
— |
% |
|
1.4 |
% |
|
0.6 |
% |
Consumer Interactive |
|
7.3 |
% |
|
7.3 |
% |
|
— |
% |
|
7.3 |
% |
|
7.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Revenue: |
|
|
|
|
|
|
|
|
|
|
Consolidated(1) |
|
10.9 |
% |
|
11.8 |
% |
|
0.8 |
% |
|
10.1 |
% |
|
11.0 |
% |
U.S. Markets |
|
11.8 |
% |
|
11.8 |
% |
|
1.4 |
% |
|
10.4 |
% |
|
10.4 |
% |
Financial Services |
|
12.9 |
% |
|
12.9 |
% |
|
— |
% |
|
12.9 |
% |
|
12.9 |
% |
Emerging Verticals |
|
10.6 |
% |
|
10.6 |
% |
|
2.9 |
% |
|
7.7 |
% |
|
7.7 |
% |
International(1) |
|
10.1 |
% |
|
13.6 |
% |
|
— |
% |
|
10.1 |
% |
|
13.6 |
% |
Canada |
|
10.9 |
% |
|
11.9 |
% |
|
— |
% |
|
10.9 |
% |
|
11.9 |
% |
Latin America |
|
7.5 |
% |
|
13.4 |
% |
|
— |
% |
|
7.5 |
% |
|
13.4 |
% |
United Kingdom(1) |
|
6.1 |
% |
|
12.1 |
% |
|
— |
% |
|
6.1 |
% |
|
12.1 |
% |
Africa |
|
2.4 |
% |
|
7.3 |
% |
|
— |
% |
|
2.4 |
% |
|
7.3 |
% |
India |
|
33.0 |
% |
|
33.7 |
% |
|
— |
% |
|
33.0 |
% |
|
33.7 |
% |
Asia Pacific |
|
1.4 |
% |
|
0.6 |
% |
|
— |
% |
|
1.4 |
% |
|
0.6 |
% |
Consumer Interactive |
|
7.3 |
% |
|
7.3 |
% |
|
— |
% |
|
7.3 |
% |
|
7.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
Consolidated(1) |
|
14.7 |
% |
|
15.6 |
% |
|
0.1 |
% |
|
14.6 |
% |
|
15.5 |
% |
U.S. Markets |
|
18.3 |
% |
|
18.3 |
% |
|
0.1 |
% |
|
18.2 |
% |
|
18.2 |
% |
International(1) |
|
11.9 |
% |
|
15.5 |
% |
|
— |
% |
|
11.9 |
% |
|
15.5 |
% |
Consumer Interactive |
|
10.3 |
% |
|
10.3 |
% |
|
— |
% |
|
10.3 |
% |
|
10.3 |
% |
SCHEDULE 1TRANSUNION AND
SUBSIDIARIESRevenue, Adjusted Revenue, and
Adjusted EBITDA growth rates as Reported, CC, Inorganic, Organic
and Organic CC (Unaudited)
|
|
For the Nine Months Ended September 30, 2019 compared with the Nine
Months Ended September 30, 2018 |
|
|
Reported |
|
CC Growth(2) |
|
Inorganic(1,3) |
|
Organic Growth(4) |
|
Organic CC Growth(5) |
Revenue: |
|
|
|
|
|
|
|
|
|
|
Consolidated(1) |
|
15.6 |
% |
|
16.9 |
% |
|
6.8 |
% |
|
8.9 |
% |
|
10.1 |
% |
U.S. Markets |
|
11.1 |
% |
|
11.1 |
% |
|
3.9 |
% |
|
7.2 |
% |
|
7.2 |
% |
Financial Services |
|
9.1 |
% |
|
9.1 |
% |
|
1.5 |
% |
|
7.6 |
% |
|
7.6 |
% |
Emerging Verticals |
|
13.4 |
% |
|
13.4 |
% |
|
6.6 |
% |
|
6.7 |
% |
|
6.8 |
% |
International(1) |
|
38.1 |
% |
|
44.4 |
% |
|
22.1 |
% |
|
16.0 |
% |
|
22.3 |
% |
Canada |
|
7.2 |
% |
|
10.6 |
% |
|
— |
% |
|
7.2 |
% |
|
10.6 |
% |
Latin America |
|
3.2 |
% |
|
11.3 |
% |
|
— |
% |
|
3.2 |
% |
|
11.3 |
% |
United Kingdom(1) |
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
Africa |
|
(6.7 |
)% |
|
4.0 |
% |
|
— |
% |
|
(6.7 |
)% |
|
4.0 |
% |
India |
|
34.1 |
% |
|
40.5 |
% |
|
— |
% |
|
34.1 |
% |
|
40.5 |
% |
Asia Pacific |
|
2.6 |
% |
|
2.5 |
% |
|
— |
% |
|
2.6 |
% |
|
2.5 |
% |
Consumer Interactive |
|
5.7 |
% |
|
5.7 |
% |
|
— |
% |
|
5.7 |
% |
|
5.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Revenue: |
|
|
|
|
|
|
|
|
|
|
Consolidated(1) |
|
14.8 |
% |
|
16.0 |
% |
|
7.0 |
% |
|
7.8 |
% |
|
9.0 |
% |
U.S. Markets |
|
11.0 |
% |
|
11.1 |
% |
|
3.9 |
% |
|
7.1 |
% |
|
7.1 |
% |
Financial Services |
|
9.1 |
% |
|
9.1 |
% |
|
1.5 |
% |
|
7.6 |
% |
|
7.6 |
% |
Emerging Verticals |
|
13.2 |
% |
|
13.2 |
% |
|
6.7 |
% |
|
6.5 |
% |
|
6.6 |
% |
International(1) |
|
33.1 |
% |
|
39.1 |
% |
|
22.5 |
% |
|
10.6 |
% |
|
16.7 |
% |
Canada |
|
7.2 |
% |
|
10.6 |
% |
|
— |
% |
|
7.2 |
% |
|
10.6 |
% |
Latin America |
|
3.2 |
% |
|
11.3 |
% |
|
— |
% |
|
3.2 |
% |
|
11.3 |
% |
United Kingdom(1) |
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
|
nm |
|
Africa |
|
(6.7 |
)% |
|
4.0 |
% |
|
— |
% |
|
(6.7 |
)% |
|
4.0 |
% |
India |
|
34.1 |
% |
|
40.5 |
% |
|
— |
% |
|
34.1 |
% |
|
40.5 |
% |
Asia Pacific |
|
2.6 |
% |
|
2.5 |
% |
|
— |
% |
|
2.6 |
% |
|
2.5 |
% |
Consumer Interactive |
|
5.7 |
% |
|
5.7 |
% |
|
— |
% |
|
5.7 |
% |
|
5.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
Consolidated(1) |
|
17.3 |
% |
|
18.6 |
% |
|
5.8 |
% |
|
11.5 |
% |
|
12.8 |
% |
U.S. Markets |
|
14.8 |
% |
|
14.8 |
% |
|
1.4 |
% |
|
13.4 |
% |
|
13.4 |
% |
International(1) |
|
43.4 |
% |
|
50.1 |
% |
|
24.5 |
% |
|
18.8 |
% |
|
25.6 |
% |
Consumer Interactive |
|
6.1 |
% |
|
6.1 |
% |
|
— |
% |
|
6.1 |
% |
|
6.1 |
% |
nm: not meaningful
- 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.
- 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.
- Inorganic growth rate represents
growth attributable to the first twelve months of activity for
recent business acquisitions.
- Organic growth rate is the reported
growth rate less the inorganic growth rate.
- 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 Ended September 30, |
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenue and Adjusted
Revenue: |
|
|
|
|
|
|
|
U.S. Markets gross
revenue |
|
|
|
|
|
|
|
Financial Services |
$ |
225.3 |
|
|
$ |
199.6 |
|
|
$ |
627.4 |
|
|
$ |
574.8 |
|
Emerging Verticals |
194.9 |
|
|
175.1 |
|
|
567.5 |
|
|
500.4 |
|
Total U.S. Markets gross
revenue |
420.2 |
|
|
374.8 |
|
|
1,194.9 |
|
|
1,075.3 |
|
Acquisition revenue -
related adjustments(1) |
— |
|
|
1.1 |
|
|
0.4 |
|
|
1.1 |
|
U.S. Markets gross Adjusted
Revenue |
$ |
420.2 |
|
|
$ |
375.9 |
|
|
$ |
1,195.2 |
|
|
$ |
1,076.4 |
|
|
|
|
|
|
|
|
|
International gross revenue |
|
|
|
|
|
|
|
Canada |
27.3 |
|
|
24.6 |
|
|
75.7 |
|
|
70.5 |
|
Latin America |
26.4 |
|
|
24.6 |
|
|
77.9 |
|
|
75.6 |
|
UK |
47.6 |
|
|
28.2 |
|
|
136.4 |
|
|
35.9 |
|
Africa |
15.7 |
|
|
15.3 |
|
|
44.7 |
|
|
47.9 |
|
India |
27.4 |
|
|
20.6 |
|
|
80.0 |
|
|
59.7 |
|
Asia Pacific |
15.6 |
|
|
15.4 |
|
|
42.4 |
|
|
41.3 |
|
Total International gross
revenue |
160.0 |
|
|
128.7 |
|
|
457.1 |
|
|
330.9 |
|
Acquisition revenue -
related adjustments(1) |
— |
|
|
16.6 |
|
|
5.6 |
|
|
16.6 |
|
International Adjusted
Revenue |
$ |
160.0 |
|
|
$ |
145.3 |
|
|
$ |
462.7 |
|
|
$ |
347.6 |
|
|
|
|
|
|
|
|
|
Consumer Interactive gross
revenue |
$ |
127.8 |
|
|
$ |
119.1 |
|
|
$ |
374.7 |
|
|
$ |
354.6 |
|
|
|
|
|
|
|
|
|
Less: intersegment
eliminations |
|
|
|
|
|
|
|
U.S. Markets |
(17.1 |
) |
|
(17.5 |
) |
|
(51.8 |
) |
|
(52.4 |
) |
International |
(1.3 |
) |
|
(1.3 |
) |
|
(3.8 |
) |
|
(3.9 |
) |
Consumer Interactive |
(0.2 |
) |
|
(0.2 |
) |
|
(0.6 |
) |
|
(0.5 |
) |
Total intersegment
eliminations |
(18.7 |
) |
|
(19.0 |
) |
|
(56.2 |
) |
|
(56.8 |
) |
|
|
|
|
|
|
|
|
Total revenue, as
reported |
$ |
689.3 |
|
|
$ |
603.6 |
|
|
$ |
1,970.5 |
|
|
$ |
1,704.1 |
|
Acquisition
revenue-related adjustments(1) |
— |
|
|
17.7 |
|
|
5.9 |
|
|
17.7 |
|
Consolidated Adjusted
Revenue |
$ |
689.3 |
|
|
$ |
621.3 |
|
|
$ |
1,976.4 |
|
|
$ |
1,721.8 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA: |
|
|
|
|
|
|
|
U.S. Markets |
$ |
181.0 |
|
|
$ |
153.0 |
|
|
$ |
498.5 |
|
|
$ |
434.3 |
|
International |
64.0 |
|
|
57.3 |
|
|
188.6 |
|
|
131.5 |
|
Consumer Interactive |
66.5 |
|
|
60.3 |
|
|
185.8 |
|
|
175.2 |
|
Corporate |
(30.7 |
) |
|
(25.7 |
) |
|
(89.4 |
) |
|
(72.8 |
) |
Consolidated Adjusted EBITDA |
$ |
280.9 |
|
|
$ |
244.9 |
|
|
$ |
783.5 |
|
|
$ |
668.1 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin: |
|
|
|
|
|
|
|
U.S. Markets |
43.1 |
% |
|
40.7 |
% |
|
41.7 |
% |
|
40.3 |
% |
International |
40.0 |
% |
|
39.4 |
% |
|
40.8 |
% |
|
37.8 |
% |
Consumer Interactive |
52.1 |
% |
|
50.7 |
% |
|
49.6 |
% |
|
49.4 |
% |
Consolidated |
40.7 |
% |
|
39.4 |
% |
|
39.6 |
% |
|
38.8 |
% |
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 Ended September 30, |
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Reconciliation of net income
attributable to TransUnion to consolidated Adjusted EBITDA: |
|
|
|
|
|
|
|
Net income attributable to
TransUnion |
$ |
91.7 |
|
|
$ |
46.3 |
|
|
$ |
264.1 |
|
|
$ |
174.4 |
|
Discontinued operations, net
of tax |
— |
|
|
1.4 |
|
|
4.6 |
|
|
1.4 |
|
Net income from continuing
operations attributable to TransUnion |
91.7 |
|
|
47.7 |
|
|
268.7 |
|
|
175.9 |
|
Net interest expense |
41.3 |
|
|
42.6 |
|
|
128.2 |
|
|
89.0 |
|
Provision for income taxes |
24.2 |
|
|
28.6 |
|
|
64.2 |
|
|
72.1 |
|
Depreciation and amortization |
88.7 |
|
|
84.2 |
|
|
271.4 |
|
|
218.8 |
|
EBITDA |
246.0 |
|
|
203.2 |
|
|
732.5 |
|
|
555.8 |
|
Adjustments to EBITDA: |
|
|
|
|
|
|
|
Acquisition-related revenue adjustments(1) |
— |
|
|
17.7 |
|
|
5.9 |
|
|
17.7 |
|
Stock-based compensation(2) |
14.7 |
|
|
16.3 |
|
|
35.6 |
|
|
43.2 |
|
Mergers and acquisitions, divestitures and business
optimization(3) |
4.8 |
|
|
6.2 |
|
|
(7.8 |
) |
|
35.3 |
|
Other(4) |
15.4 |
|
|
1.5 |
|
|
17.3 |
|
|
16.1 |
|
Total adjustments to
EBITDA |
34.9 |
|
|
41.7 |
|
|
51.0 |
|
|
112.4 |
|
Consolidated Adjusted
EBITDA |
$ |
280.9 |
|
|
$ |
244.9 |
|
|
$ |
783.5 |
|
|
$ |
668.1 |
|
As a result of displaying amounts in millions,
rounding differences may exist in the tables above and footnotes
below.
- 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. Beginning in the third quarter
of 2019, we no longer have these adjustments to revenue. 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.
- Consisted of stock-based
compensation and cash-settled stock-based compensation.
- For the three months ended
September 30, 2019, consisted of the following adjustments: a $2.0
million loss on assets of a small business in our United Kingdom
region that are classified as held-for-sale; $2.0 million of
Callcredit integration costs; a $0.6 million adjustment to
contingent consideration expense from previous acquisitions; $0.5
million of acquisition expenses; and a $(0.2) million reimbursement
for transition services provided to the buyers of certain of our
discontinued operations.For the nine months ended September 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; $(0.4) million
reimbursement for transition services provided to the buyers of our
discontinued operations; $10.5 million of Callcredit integration
costs; a $8.6 million loss on the impairment of certain Cost Method
investments; $2.1 million of acquisition expenses; a $2.0 million
loss on assets of a small business in our United Kingdom region
that are classified as held-for-sale; and a $0.6 million adjustment
to contingent consideration expense from previous acquisitions.For
the three months ended September 30, 2018, consisted of the
following adjustments: $4.2 million of Callcredit integration
costs; $1.7 million of acquisition expenses; a $0.2 million loss on
the divestiture of a small business operation; a $0.2 million loss
from a fair value remeasurement of an investment in a
nonconsolidated affiliate, offset by $(0.1) million for the portion
that is attributable to the non-controlling interest; a $0.1
million adjustment to contingent consideration expense from
previous acquisitions; and $(0.1) million of miscellaneous.For the
nine months ended September 30, 2018, consisted of the following
adjustments: $28.7 million of acquisition expenses; $4.2 million of
Callcredit integration costs; a $1.5 million net loss from the fair
value remeasurements of investments in nonconsolidated affiliates;
$1.2 million loss on the divestiture of a small business operation,
offset by $(0.4) million for the portion that is attributable to
the non-controlling interest; and a $0.1 million adjustment to
contingent consideration expense from previous acquisitions.
- For the three months ended
September 30, 2019, consisted of the following adjustments: $19.7
million of expenses (including $1.8 million of administrative
expenses) associated with the Fraud Incident offset by the ($7.1)
million portion that is attributable to the non-controlling
interest; $1.6 million from currency remeasurement; $0.7 million of
deferred loan fees written off as a result of the prepayments on
our debt; and $0.5 million of loan fees.For the nine months ended
September 30, 2019, consisted of the following adjustments: $19.7
million of expenses (including $1.8 million of administrative
expenses) associated with the Fraud Incident offset by the ($7.1)
million portion that is attributable to the non-controlling
interest; $1.9 million from currency remeasurement; $1.5 million of
loan fees; $1.5 million of deferred loan fees written off as a
result of the prepayments on our debt; and $(0.1) million of
miscellaneous.For the three months ended September 30, 2018,
consisted of the following adjustments: $1.0 million loss from
currency remeasurement of our foreign operations; $0.5 million of
loan fees; $0.1 million of fees related to new financing under our
senior secured credit facility; and $(0.1) million of
miscellaneous.For the nine months ended September 30, 2018,
consisted of the following adjustments: $12.0 million of fees
related to new financing under our senior secured credit facility;
a $3.3 million loss from currency remeasurement of our foreign
operations; $1.1 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; a $(0.7)
million mark-to-market gain related to ineffectiveness of our
interest rate hedge; and $(0.1) million of miscellaneous.
SCHEDULE 3TRANSUNION AND
SUBSIDIARIESAdjusted Net Income and Adjusted
Earnings Per Share - Unaudited(in millions, except per
share data)
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net income attributable to
TransUnion |
|
$ |
91.7 |
|
|
$ |
46.3 |
|
|
$ |
264.1 |
|
|
$ |
174.4 |
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
188.2 |
|
|
185.1 |
|
|
187.5 |
|
|
184.4 |
|
Diluted |
|
192.0 |
|
|
191.2 |
|
|
191.6 |
|
|
190.8 |
|
|
|
|
|
|
|
|
|
|
Basic earnings per common
share from: |
|
|
|
|
|
|
|
|
Income from continuing operations attributable to TransUnion |
|
$ |
0.49 |
|
|
$ |
0.26 |
|
|
$ |
1.43 |
|
|
$ |
0.95 |
|
Discontinued operations, net of tax |
|
— |
|
|
(0.01 |
) |
|
(0.02 |
) |
|
(0.01 |
) |
Net Income attributable to TransUnion |
|
$ |
0.49 |
|
|
$ |
0.25 |
|
|
$ |
1.41 |
|
|
$ |
0.95 |
|
Diluted earnings per common
share from: |
|
|
|
|
|
|
|
|
Income from continuing operations attributable to TransUnion |
|
$ |
0.48 |
|
|
$ |
0.25 |
|
|
$ |
1.40 |
|
|
$ |
0.92 |
|
Discontinued operations, net of tax |
|
— |
|
|
(0.01 |
) |
|
(0.02 |
) |
|
(0.01 |
) |
Net Income attributable to TransUnion |
|
$ |
0.48 |
|
|
$ |
0.24 |
|
|
$ |
1.38 |
|
|
$ |
0.91 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of net income
attributable to TransUnion to Adjusted Net Income: |
|
|
|
|
|
|
|
|
Net income attributable to
TransUnion |
|
91.7 |
|
|
46.3 |
|
|
264.1 |
|
|
174.4 |
|
Discontinued operations |
|
— |
|
|
1.4 |
|
|
4.6 |
|
|
1.4 |
|
Net income from continuing
operations attributable to TransUnion |
|
91.7 |
|
|
47.7 |
|
|
268.7 |
|
|
175.9 |
|
Adjustments before income tax
items: |
|
|
|
|
|
|
|
|
Acquisition revenue-related adjustments (1) |
|
— |
|
|
17.7 |
|
|
5.9 |
|
|
17.7 |
|
Stock-based compensation(2) |
|
14.7 |
|
|
16.3 |
|
|
35.6 |
|
|
43.2 |
|
Mergers and acquisitions, divestitures and business
optimization(3) |
|
4.8 |
|
|
6.2 |
|
|
(7.8 |
) |
|
35.3 |
|
Other(4) |
|
14.9 |
|
|
1.0 |
|
|
15.9 |
|
|
15.0 |
|
Amortization of certain intangible assets(5) |
|
48.4 |
|
|
52.1 |
|
|
157.6 |
|
|
127.0 |
|
Total adjustments before
income tax items |
|
82.8 |
|
|
93.4 |
|
|
207.2 |
|
|
238.2 |
|
Change in provision for
income taxes per schedule 4 |
|
(28.8 |
) |
|
(16.4 |
) |
|
(83.4 |
) |
|
(63.1 |
) |
Adjusted Net Income |
|
$ |
145.7 |
|
|
$ |
124.7 |
|
|
$ |
392.5 |
|
|
$ |
351.0 |
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
188.2 |
|
|
185.1 |
|
|
187.5 |
|
|
184.4 |
|
Diluted |
|
192.0 |
|
|
191.2 |
|
|
191.6 |
|
|
190.8 |
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings per
Share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.77 |
|
|
$ |
0.67 |
|
|
$ |
2.09 |
|
|
$ |
1.90 |
|
Diluted(6) |
|
$ |
0.76 |
|
|
$ |
0.65 |
|
|
$ |
2.05 |
|
|
$ |
1.84 |
|
|
|
|
|
|
|
|
|
|
As a result of displaying amounts in millions,
rounding differences may exist in the table above and footnotes
below.
- 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. Beginning in the third quarter
of 2019, we no longer have these adjustments to revenue.
- Consisted of stock-based
compensation and cash-settled stock-based compensation.
- For the three months ended
September 30, 2019, consisted of the following adjustments: a $2.0
million loss on assets of a small business in our United Kingdom
region that are classified as held-for-sale; $2.0 million of
Callcredit integration costs; a $0.6 million adjustment to
contingent consideration expense from previous acquisitions; $0.5
million of acquisition expenses; and a $(0.2) million reimbursement
for transition services provided to the buyers of certain of our
discontinued operations.For the nine months ended September 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; $(0.4) million
reimbursement for transition services provided to the buyers of our
discontinued operations; $10.5 million of Callcredit integration
costs; a $8.6 million loss on the impairment of certain Cost Method
investments; $2.1 million of acquisition expenses; a $2.0 million
loss on assets of a small business in our United Kingdom region
that are classified as held-for-sale; and a $0.6 million adjustment
to contingent consideration expense from previous acquisitions.For
the three months ended September 30, 2018, consisted of the
following adjustments: $4.2 million of Callcredit integration
costs; $1.7 million of acquisition expenses; a $0.2 million loss on
the divestiture of a small business operation; a $0.2 million loss
from a fair value remeasurement of an investment in a
nonconsolidated affiliate, offset by $(0.1) million for the portion
that is attributable to the non-controlling interest; a $0.1
million adjustment to contingent consideration expense from
previous acquisitions; and $(0.1) million of miscellaneous.For the
nine months ended September 30, 2018, consisted of the following
adjustments: $28.7 million of acquisition expenses; $4.2 million of
Callcredit integration costs; a $1.5 million net loss from the fair
value remeasurements of investments in nonconsolidated affiliates;
$1.2 million loss on the divestiture of a small business operation,
offset by $(0.4) million for the portion that is attributable to
the non-controlling interest; and a $0.1 million adjustment to
contingent consideration expense from previous acquisitions.
- For the three months ended
September 30, 2019, consisted of the following adjustments: $19.7
million of expenses (including $1.8 million of administrative
expenses) associated with the Fraud Incident offset by the ($7.1)
million portion that is attributable to the non-controlling
interest; $1.6 million from currency remeasurement; and $0.7
million of deferred loan fees written off as a result of the
prepayments on our debt.For the nine months ended September 30,
2019, consisted of the following adjustments: $19.7 million of
expenses (including $1.8 million of administrative expenses)
associated with the Fraud Incident offset by the ($7.1) million
portion that is attributable to the non-controlling interest; $1.9
million from currency remeasurement; and $1.5 million of deferred
loan fees written off as a result of the prepayments on our
debt.For the three months ended September 30, 2018, consisted of
the following adjustments: a $1.0 million loss from currency
remeasurement of our foreign operations; $0.1 million of fees
related to new financing under our senior secured credit facility;
and $(0.1) million of miscellaneous.For the nine months ended
September 30, 2018, consisted of the following adjustments: $12.0
million of fees related to new financing under our senior secured
credit facility; a $3.3 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)
million of miscellaneous.
- 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.
- As of September 30, 2019 and
2018, 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.
SCHEDULE 4TRANSUNION AND
SUBSIDIARIESEffective Tax Rate and Adjusted
Effective Tax Rate - Unaudited(dollars in millions)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Income before income taxes |
$ |
112.5 |
|
|
$ |
79.4 |
|
|
$ |
334.3 |
|
|
$ |
255.6 |
|
Total adjustments before income tax items from schedule 3 |
82.8 |
|
|
93.4 |
|
|
207.2 |
|
|
238.2 |
|
Noncontrolling interest portion of Adjusted Net Income
adjustments |
7.1 |
|
|
— |
|
|
7.1 |
|
|
— |
|
Adjusted income before income
taxes |
$ |
202.4 |
|
|
$ |
172.8 |
|
|
$ |
548.7 |
|
|
$ |
493.8 |
|
|
|
|
|
|
|
|
|
(Provision) for income
taxes |
(24.2 |
) |
|
(28.6 |
) |
|
(64.2 |
) |
|
(72.1 |
) |
Adjustments for income
taxes: |
|
|
|
|
|
|
|
Tax effect of above adjustments(1) |
(17.6 |
) |
|
(16.1 |
) |
|
(43.2 |
) |
|
(50.2 |
) |
Eliminate impact of excess tax benefits for share
compensation(2) |
(4.6 |
) |
|
(7.6 |
) |
|
(31.9 |
) |
|
(25.7 |
) |
Eliminate one time impact of tax reform items(3) |
— |
|
|
5.6 |
|
|
— |
|
|
5.6 |
|
Other(4) |
(6.6 |
) |
|
1.8 |
|
|
(8.3 |
) |
|
7.2 |
|
Total adjustments for income
taxes |
(28.8 |
) |
|
(16.4 |
) |
|
(83.4 |
) |
|
(63.1 |
) |
Adjusted provision for income
taxes |
$ |
(53.1 |
) |
|
$ |
(45.0 |
) |
|
$ |
(147.6 |
) |
|
$ |
(135.2 |
) |
|
|
|
|
|
|
|
|
Effective tax rate |
21.6 |
% |
|
36.0 |
% |
|
19.2 |
% |
|
28.2 |
% |
Adjusted Effective Tax
Rate |
26.2 |
% |
|
26.0 |
% |
|
26.9 |
% |
|
27.4 |
% |
As a result of displaying amounts in millions,
rounding differences may exist in the table above.
- Tax rates used to calculate the tax
expense impact are based on the nature of each item.
- Eliminates the impact of excess tax
benefits for share compensation.
- Eliminates one time impacts of tax
reform, including remeasurement of domestic deferred tax balances
at the new 21% tax rate and mandatory repatriation of unremitted
earnings (net of previously recorded reserves).
- 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 September 30, |
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
U.S. Markets |
$ |
56.3 |
|
|
$ |
49.4 |
|
|
$ |
169.4 |
|
|
$ |
139.7 |
|
International |
27.8 |
|
|
30.5 |
|
|
88.5 |
|
|
66.4 |
|
Consumer Interactive |
3.3 |
|
|
3.1 |
|
|
9.7 |
|
|
9.0 |
|
Corporate |
1.3 |
|
|
1.3 |
|
|
3.8 |
|
|
3.8 |
|
Total depreciation and
amortization |
$ |
88.7 |
|
|
$ |
84.2 |
|
|
$ |
271.4 |
|
|
$ |
218.8 |
|
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 Ending December 31, 2019 |
|
Twelve Months Ending December 31, 2019 |
|
Low |
|
High |
|
Low |
|
High |
Guidance
reconciliation of revenue to Adjusted Revenue: |
|
|
|
|
|
|
|
GAAP revenue |
$ |
667 |
|
|
$ |
672 |
|
|
$ |
2,638 |
|
|
$ |
2,643 |
|
Acquisitions revenue-related
adjustment(1) |
— |
|
|
— |
|
|
6 |
|
|
6 |
|
Adjusted Revenue |
$ |
667 |
|
|
$ |
672 |
|
|
$ |
2,644 |
|
|
$ |
2,649 |
|
|
|
|
|
|
|
|
|
Guidance
reconciliation of net income attributable to TransUnion to Adjusted
EBITDA: |
|
|
|
|
|
|
|
Net income attributable to
TransUnion |
$ |
87 |
|
|
$ |
91 |
|
|
$ |
351 |
|
|
$ |
355 |
|
Discontinued operations, net
of tax |
— |
|
|
— |
|
|
5 |
|
|
5 |
|
Net income attributable to
TransUnion from continuing operations |
87 |
|
|
91 |
|
|
356 |
|
|
359 |
|
Interest, taxes and
depreciation and amortization |
151 |
|
|
152 |
|
|
615 |
|
|
616 |
|
EBITDA |
239 |
|
|
243 |
|
|
971 |
|
|
975 |
|
Acquisitions revenue-related
adjustment(1) |
— |
|
|
— |
|
|
6 |
|
|
6 |
|
Stock-based compensation,
mergers, acquisitions divestitures and business
optimization-related expenses and other adjustments(2) |
26 |
|
|
26 |
|
|
71 |
|
|
71 |
|
Adjusted EBITDA |
$ |
264 |
|
|
$ |
268 |
|
|
$ |
1,048 |
|
|
$ |
1,052 |
|
|
|
|
|
|
|
|
|
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 |
$ |
0.45 |
|
|
$ |
0.47 |
|
|
$ |
1.86 |
|
|
$ |
1.87 |
|
Adjustments to diluted
earnings per share(1)(2) |
0.24 |
|
|
0.24 |
|
|
0.89 |
|
|
0.89 |
|
Adjusted Diluted Earnings per
Share from Continuing Operations |
$ |
0.69 |
|
|
$ |
0.71 |
|
|
$ |
2.74 |
|
|
$ |
2.76 |
|
As a result of displaying amounts in millions,
rounding differences may exist in the table above.
- 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.
- 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.
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