ATLANTA, April 17,
2024 /PRNewswire/ -- Equifax® (NYSE: EFX)
today announced financial results for the quarter ended
March 31, 2024.
- First quarter 2024 revenue of $1.389
billion grew strong 7%, with 9% non-mortgage local currency
revenue growth.
- U.S. mortgage revenue grew a strong 6% in the first quarter
despite a 19% decline in USIS mortgage credit inquiries.
- Workforce Solutions first quarter revenue growth of 1%, with
strong 7% non-mortgage revenue growth and Verification Services
non-mortgage revenue growth of very strong 15% led by
Government.
- USIS first quarter revenue growth of 10%, the strongest in
three years, with 38% mortgage revenue growth and 1% non-mortgage
revenue growth.
- International first quarter revenue growth of 13% on a reported
basis and up 20% on a local currency basis, with organic local
currency revenue growth of 6%.
- Strong new product innovation leveraging the new EFX Cloud
with 9% first quarter new product Vitality Index and 85% of new
models and scores built using Artificial Intelligence and Machine
Learning.
- Maintaining full-year 2024 guidance from strong first quarter
results with midpoint expectation for revenue of $5.720 billion, up 8.6%, with strong non-mortgage
local currency revenue growth of over 10% and Adjusted EPS of
$7.35.
"Equifax performed well in the first quarter against our EFX2026
strategic priorities in a very challenging mortgage market
delivering revenue of $1.389 billion,
up a strong 7%. Our U.S. mortgage business grew a strong 6% despite
a 19% decline in USIS mortgage credit inquiries. Our non-mortgage
business, which was about 80% of Equifax revenue in the first
quarter, delivered very strong broad-based 9% local currency
revenue growth, from continued strong new product performance with
a New Product Vitality Index of 9% and 85% of new models and scores
built using AI and ML. Workforce Solutions delivered very strong
15% non-mortgage Verification Services revenue growth led by the
Government business, with 1% overall growth from the U.S. mortgage
market decline. USIS delivered very strong revenue growth of 10%,
its strongest in three years, from very strong 38% mortgage revenue
growth, and International had another good quarter, finishing with
organic local currency revenue growth of 6%," said Mark W. Begor, Equifax Chief Executive
Officer.
"We are maintaining our full-year 2024 guidance from our strong
first quarter results with a midpoint expectation for revenue of
$5.720 billion, up 8.6% on a reported
basis and organic local currency growth of 8.5%, and Adjusted EPS
of $7.35. While Equifax continues to
execute well against its EFX2026 strategic priorities, our 2024
guidance reflects an expectation of a decline of about 11% in our
2024 U.S. mortgage credit inquiries, which is consistent with the
current run-rates, and compares to down 34% in 2023. EBITDA margins
are expected to expand to 33.3%, reflecting organic revenue growth
and the additional cost savings from Cloud spending reductions
plans.
"We have strong momentum in 2024 and are confident in the future
of the New Equifax as we deliver strong non-mortgage revenue
growth, move towards completion of our Cloud transformation,
leverage our new Cloud capabilities to accelerate new product
roll-outs that 'Only Equifax' can provide, and invest in new
products, data, analytics, and AI capabilities, which are expected
to drive growth in 2024 and beyond. We are energized about the New
Equifax and remain confident in our long-term 8-12% revenue growth
framework that is expected to deliver higher margins and free cash
flow."
Financial Results Summary
The Company reported revenue of $1,389.4
million in the first quarter of 2024, up 7% on a reported
basis and up 8% on a local currency basis compared to the first
quarter of 2023.
Net income attributable to Equifax of $124.9 million was up 11% in the first quarter of
2024 compared to $112.4 million in
the first quarter of 2023.
Diluted EPS attributable to Equifax was $1.00 per share for the first quarter of 2024, up
10% compared to $0.91 per share in
the first quarter of 2023.
Workforce Solutions first quarter results
- Total revenue was $602.8 million
in the first quarter of 2024, up 1% compared to the first quarter
of 2023. Operating margin for Workforce Solutions was 42.3% in the
first quarter of 2024 compared to 41.7% in the first quarter of
2023. Adjusted EBITDA margin for Workforce Solutions was 51.1% in
the first quarter of 2024 compared to 50.4% in the first quarter of
2023.
- Verification Services revenue was $476.5
million, up 5% compared to the first quarter of 2023.
- Employer Services revenue was $126.3
million, down 10% compared to the first quarter of
2023.
USIS first quarter results
- Total revenue was $465.3 million
in the first quarter of 2024, up 10% compared to $421.7 million in the first quarter of 2023.
Operating margin for USIS was 19.9% in the first quarter of 2024
compared to 18.6% in the first quarter of 2023. Adjusted EBITDA
margin for USIS was 32.7% in the first quarter of 2024 compared to
32.6% in the first quarter of 2023.
- Online Information Solutions revenue was $380.2 million, up 12% compared to the first
quarter of 2023.
- Mortgage Solutions revenue was $38.0
million, up 14% compared to the first quarter of 2023.
- Financial Marketing Services revenue was $47.1 million, down 1% compared to the first
quarter of 2023.
International first quarter results
- Total revenue was $321.3 million
in the first quarter of 2024, up 13% and up 20% compared to the
first quarter of 2023 on a reported and local currency basis,
respectively. Operating margin for International was 9.9% in the
first quarter of 2024, compared to 11.5% in the first quarter of
2023. Adjusted EBITDA margin for International was 24.3% in the
first quarter of 2024, compared to 23.5% in the first quarter of
2023.
- Latin America revenue was
$91.1 million, up 65% compared to the
first quarter of 2023 on a reported basis and up 102% on a local
currency basis.
- Europe revenue was
$86.2 million, up 14% compared to the
first quarter of 2023 on a reported basis and up 10% on a local
currency basis.
- Asia Pacific revenue was
$78.2 million, down 13% compared to
the first quarter of 2023 on a reported basis and down 10% on a
local currency basis.
- Canada revenue was
$65.8 million, up 4% compared to the
first quarter of 2023 on both a reported and a local currency
basis.
Adjusted EPS and Adjusted EBITDA Margin
- Adjusted EPS attributable to Equifax was $1.50 in the first quarter of 2024, up 5%
compared to the first quarter of 2023.
- Adjusted EBITDA margin was 29.1% in the first quarter of 2024
compared to 29.2% in the first quarter of 2023.
- These financial measures exclude certain items as described
further in the Non-GAAP Financial Measures section below.
2024 Second Quarter
and Full Year Guidance
|
|
|
|
Q2
2024
|
|
FY
2024
|
|
Low-End
|
|
High-End
|
|
Low-End
|
|
High-End
|
Reported
Revenue
|
$1.410
billion
|
|
$1.430
billion
|
|
$5.670
billion
|
|
$5.770
billion
|
Reported Revenue
Growth
|
7.0 %
|
|
8.5 %
|
|
7.7 %
|
|
9.6 %
|
Local Currency Growth
(1)
|
9.0 %
|
|
10.5 %
|
|
9.6 %
|
|
11.5 %
|
Organic Local Currency
Growth (1)
|
5.7 %
|
|
7.2 %
|
|
7.6 %
|
|
9.5 %
|
Adjusted Earnings Per
Share
|
$1.65 per
share
|
|
$1.75 per
share
|
|
$7.20 per
share
|
|
$7.50 per
share
|
|
(1) Refer to page 8 for
definitions.
|
About Equifax
At Equifax (NYSE: EFX), we believe knowledge drives progress. As
a global data, analytics, and technology company, we play an
essential role in the global economy by helping financial
institutions, companies, employers, and government agencies make
critical decisions with greater confidence. Our unique blend of
differentiated data, analytics, and cloud technology drives
insights to power decisions to move people forward. Headquartered
in Atlanta and supported by nearly
15,000 employees worldwide, Equifax operates or has investments in
24 countries in North America,
Central and South America,
Europe, and the Asia Pacific region. For more information,
visit Equifax.com.
Earnings Conference Call and Audio Webcast
In conjunction with this release, Equifax will host a conference
call on April 18, 2024 at
8:30 a.m. (ET) via a live audio
webcast. To access the webcast and related presentation materials,
go to the Investor Relations section of our website at
www.equifax.com. The discussion will be available via replay at the
same site shortly after the conclusion of the webcast. This press
release is also available at that website.
Non-GAAP Financial Measures
This earnings release presents adjusted EPS attributable to
Equifax which is diluted EPS attributable to Equifax adjusted (to
the extent noted above for different periods) for
acquisition-related amortization expense, accrual for legal and
regulatory matters related to the 2017 cybersecurity incident, fair
market value adjustment of equity investments, foreign currency
impact of certain intercompany loans, acquisition-related costs
other than acquisition amortization, income tax effect of stock
awards recognized upon vesting or settlement, and Argentina highly inflationary foreign currency
adjustment. All adjustments are net of tax, with a reconciling item
with the aggregated tax impact of the adjustments. This earnings
release also presents (i) adjusted EBITDA and adjusted EBITDA
margin which is defined as consolidated net income attributable to
Equifax plus net interest expense, income taxes, depreciation and
amortization, and also excludes certain one-time items, (ii) local
currency revenue change which is calculated by conforming 2024
results using 2023 exchange rates and (iii) organic local currency
revenue growth which is defined as local currency revenue growth,
adjusted to reflect an increase in prior year Equifax revenue from
the revenue of acquired companies in the prior year period. These
are important financial measures for Equifax but are not financial
measures as defined by GAAP.
These non-GAAP financial measures should be reviewed in
conjunction with the relevant GAAP financial measures and are not
presented as an alternative measure of net income or EPS as
determined in accordance with GAAP.
Reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures and related notes are
presented in the Q&A. This information can also be found under
"Investor Relations/Financial Information/Non-GAAP Financial
Measures" on our website at www.equifax.com.
Forward-Looking Statements
This release contains forward-looking statements and
forward-looking information. These statements can be identified by
expressions of belief, expectation or intention, as well as
statements that are not historical fact. These statements are based
on certain factors and assumptions including with respect to
foreign exchange rates, revenue growth, results of operations and
financial performance, strategic initiatives, business plans,
prospects and opportunities, the U.S. mortgage market, economic
conditions and effective tax rates.
While the Company believes these factors and assumptions to be
reasonable based on information currently available, they may prove
to be incorrect. Several factors could cause actual results to
differ materially from those expressed or implied in the
forward-looking statements. These factors relate to (i) actions
taken by us, including, but not limited to, restructuring actions,
strategic initiatives (such as our cloud technology
transformation), capital investments and asset acquisitions or
dispositions, as well as (ii) developments beyond our control,
including, but not limited to, changes in the U.S. mortgage market
environment and changes more generally in U.S. and worldwide
economic conditions (such as changes in interest rates and
inflation levels) that materially impact consumer spending, home
prices, investment values, consumer debt, unemployment rates and
the demand for Equifax's products and services. Deteriorations in
economic conditions or increases in interest rates could lead to a
decline in demand for our products and services and negatively
impact our business. It may also impact financial markets and
corporate credit markets, which could adversely impact our access
to financing or the terms of any financing.
Other risk factors relevant to our business include: (i) any
compromise of Company, customer or consumer information due to
security breaches and other disruptions to our information
technology infrastructure; (ii) the failure to achieve and maintain
key industry or technical certifications; (iii) the failure to
realize the anticipated benefits of our cloud technology
transformation strategy; (iv) operational disruptions and strain on
our resources caused by our transition to cloud-based technologies;
(v) our ability to meet customer requirements for high system
availability and response time performance; (vi) effects on our
business if we provide inaccurate or unreliable data to customers;
(vii) our ability to maintain access to credit, employment,
financial and other data from external sources; (viii) the impact
of competition; (ix) our ability to maintain relationships with key
customers; (x) our ability to successfully introduce new products,
services and analytical capabilities; (xi) the impact on the demand
for some of our products and services due to the availability of
free or less expensive consumer information; (xii) our ability to
comply with our obligations under settlement agreements arising out
of the 2017 cybersecurity incident; (xiii) potential adverse
developments in new and pending legal proceedings, government
investigations and regulatory enforcement actions; (xiv) changes
in, and the effects of, laws, regulations and government policies
governing our business, including oversight by the Consumer
Financial Protection Bureau in the U.S., the U.K. Financial Conduct
Authority and Information Commissioner's Office in the U.K., and
the Office of Australian Information Commission and the Australian
Competition and Consumer Commission in Australia; (xv) the impact of privacy laws and
regulations; (xvi) the economic, political and other risks
associated with international sales and operations; (xvii) the
impact on our reputation and business if we are unable to fulfill
our environmental, social and governance commitments; (xviii) our
ability to realize the anticipated strategic and financial benefits
from our acquisitions, joint ventures and other alliances; (xix)
any damage to our reputation due to our dependence on outsourcing
certain portions of our operations; (xx) the termination or
suspension of our government contracts; (xxi) the impact of
infringement or misappropriation of intellectual property by us
against third parties or by third parties against us; (xxii) an
increase in our cost of borrowing and our ability to access the
capital markets due to a credit rating downgrade; (xxiii) our
ability to hire and retain key personnel; (xxiv) the impact of
adverse changes in the financial markets and corresponding effects
on our retirement and post-retirement pension plans; (xxv) the
impact of health epidemics, pandemics and similar outbreaks on our
business; and (xxvi) risks associated with our use of certain
artificial intelligence and machine learning models.
A summary of additional risks and uncertainties can be found in
our Annual Report on Form 10-K for the year ended December 31, 2023 including without limitation
under the captions "Item 1. Business -- Governmental Regulation"
and "-- Forward-Looking Statements" and "Item 1A. Risk Factors" and
in our other filings with the U.S. Securities and Exchange
Commission. Forward-looking statements are given only as at the
date of this release and the Company disclaims any obligation to
update or revise the forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by law.
EQUIFAX
CONSOLIDATED
STATEMENTS OF INCOME
|
|
|
|
Three Months Ended
March 31,
|
|
|
2024
|
|
2023
|
(In millions, except per share amounts)
|
|
(Unaudited)
|
Operating
revenue
|
|
$
1,389.4
|
|
$
1,302.0
|
Operating
expenses:
|
|
|
|
|
Cost of services
(exclusive of depreciation and amortization below)
|
|
627.7
|
|
580.4
|
Selling, general and
administrative expenses
|
|
372.6
|
|
366.1
|
Depreciation and
amortization
|
|
164.4
|
|
150.1
|
Total operating
expenses
|
|
1,164.7
|
|
1,096.6
|
Operating
income
|
|
224.7
|
|
205.4
|
Interest
expense
|
|
(59.7)
|
|
(57.6)
|
Other income,
net
|
|
1.6
|
|
4.4
|
Consolidated income
before income taxes
|
|
166.6
|
|
152.2
|
Provision for income
taxes
|
|
(40.5)
|
|
(38.7)
|
Consolidated net
income
|
|
126.1
|
|
113.5
|
Less: Net income
attributable to noncontrolling interests including redeemable
noncontrolling interests
|
|
(1.2)
|
|
(1.1)
|
Net income attributable
to Equifax
|
|
$
124.9
|
|
$
112.4
|
Basic earnings per
common share:
|
|
|
|
|
Net income
attributable to Equifax
|
|
$
1.01
|
|
$
0.92
|
Weighted-average shares
used in computing basic earnings per share
|
|
123.5
|
|
122.6
|
Diluted earnings per
common share:
|
|
|
|
|
Net income
attributable to Equifax
|
|
$
1.00
|
|
$
0.91
|
Weighted-average shares
used in computing diluted earnings per share
|
|
124.8
|
|
123.5
|
Dividends per common
share
|
|
$
0.39
|
|
$
0.39
|
EQUIFAX
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
March 31,
2024
|
|
December 31,
2023
|
(In millions, except
par values)
|
|
(Unaudited)
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
201.0
|
|
$
216.8
|
Trade accounts
receivable, net of allowance for doubtful accounts of $16.4 and
$16.7 at March 31, 2024 and December 31, 2023,
respectively
|
|
1,006.1
|
|
908.2
|
Prepaid
expenses
|
|
170.7
|
|
142.5
|
Other current
assets
|
|
71.7
|
|
88.8
|
Total current
assets
|
|
1,449.5
|
|
1,356.3
|
Property and
equipment:
|
|
|
|
|
Capitalized
internal-use software and system costs
|
|
2,596.0
|
|
2,541.0
|
Data processing
equipment and furniture
|
|
248.4
|
|
247.9
|
Land, buildings and
improvements
|
|
282.5
|
|
272.9
|
Total property
and equipment
|
|
3,126.9
|
|
3,061.8
|
Less accumulated
depreciation and amortization
|
|
(1,276.7)
|
|
(1,227.8)
|
Total property
and equipment, net
|
|
1,850.2
|
|
1,834.0
|
Goodwill
|
|
6,761.3
|
|
6,829.9
|
Indefinite-lived
intangible assets
|
|
94.8
|
|
94.8
|
Purchased intangible
assets, net
|
|
1,773.5
|
|
1,858.8
|
Other assets,
net
|
|
322.0
|
|
306.2
|
Total
assets
|
|
$
12,251.3
|
|
$
12,280.0
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Short-term debt and
current maturities of long-term debt
|
|
$
880.0
|
|
$
963.4
|
Accounts
payable
|
|
198.1
|
|
197.6
|
Accrued
expenses
|
|
306.2
|
|
245.1
|
Accrued salaries and
bonuses
|
|
113.5
|
|
168.7
|
Deferred
revenue
|
|
113.2
|
|
109.5
|
Other current
liabilities
|
|
362.8
|
|
334.7
|
Total current
liabilities
|
|
1,973.8
|
|
2,019.0
|
Long-term
debt
|
|
4,745.3
|
|
4,747.8
|
Deferred income tax
liabilities, net
|
|
454.1
|
|
474.9
|
Long-term pension and
other postretirement benefit liabilities
|
|
97.7
|
|
100.1
|
Other long-term
liabilities
|
|
268.2
|
|
250.7
|
Total
liabilities
|
|
7,539.1
|
|
7,592.5
|
Redeemable
noncontrolling interests
|
|
131.6
|
|
135.1
|
Equifax shareholders'
equity:
|
|
|
|
|
Preferred stock, $0.01
par value: Authorized shares - 10.0; Issued shares -
none
|
|
—
|
|
—
|
Common stock, $1.25
par value: Authorized shares - 300.0;
Issued shares - 189.3
at March 31, 2024 and December 31, 2023;
Outstanding shares -
123.6 and 123.3 at March 31, 2024 and December 31, 2023,
respectively
|
|
236.6
|
|
236.6
|
Paid-in
capital
|
|
1,824.7
|
|
1,761.3
|
Retained
earnings
|
|
5,685.0
|
|
5,608.6
|
Accumulated other
comprehensive loss
|
|
(526.5)
|
|
(431.2)
|
Treasury stock, at
cost, 65.1 and 65.4 shares at March 31, 2024 and
December 31, 2023, respectively
|
|
(2,652.4)
|
|
(2,635.3)
|
Stock held by employee
benefits trusts, at cost, 0.6 shares at March 31, 2024 and
December 31, 2023
|
|
(5.9)
|
|
(5.9)
|
Total Equifax
shareholders' equity
|
|
4,561.5
|
|
4,534.1
|
Noncontrolling
interests
|
|
19.1
|
|
18.3
|
Total shareholders'
equity
|
|
4,580.6
|
|
4,552.4
|
Total liabilities,
redeemable noncontrolling interests, and shareholders'
equity
|
|
$
12,251.3
|
|
$
12,280.0
|
EQUIFAX
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
Three Months Ended
March 31,
|
|
|
2024
|
|
2023
|
(In
millions)
|
|
(Unaudited)
|
Operating
activities:
|
|
|
|
|
Consolidated net
income
|
|
$
126.1
|
|
$
113.5
|
Adjustments to
reconcile consolidated net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
166.6
|
|
152.2
|
Stock-based
compensation expense
|
|
41.2
|
|
39.7
|
Deferred income
taxes
|
|
(17.9)
|
|
(11.9)
|
Gain on fair
market value adjustment of equity investments
|
|
—
|
|
(3.1)
|
Changes in
assets and liabilities, excluding effects of
acquisitions:
|
|
|
|
|
Accounts receivable,
net
|
|
(102.5)
|
|
(60.8)
|
Other assets, current
and long-term
|
|
(15.2)
|
|
(25.0)
|
Current and long term
liabilities, excluding debt
|
|
54.4
|
|
(53.7)
|
Cash provided by
operating activities
|
|
252.7
|
|
150.9
|
Investing
activities:
|
|
|
|
|
Capital
expenditures
|
|
(131.9)
|
|
(158.3)
|
Acquisitions, net of
cash acquired
|
|
—
|
|
(4.3)
|
Cash used in investing
activities
|
|
(131.9)
|
|
(162.6)
|
Financing
activities:
|
|
|
|
|
Net short-term
payments
|
|
(83.4)
|
|
(160.8)
|
Payments on long-term
debt
|
|
(4.4)
|
|
—
|
Borrowings on long-term
debt
|
|
—
|
|
175.0
|
Dividends paid to
Equifax shareholders
|
|
(48.2)
|
|
(47.9)
|
Distributions paid to
noncontrolling interests
|
|
(0.4)
|
|
—
|
Proceeds from exercise
of stock options and employee stock purchase plan
|
|
19.9
|
|
6.6
|
Payment of taxes
related to settlement of equity awards
|
|
(15.4)
|
|
(15.9)
|
Debt issuance
costs
|
|
—
|
|
(0.3)
|
Cash used in financing
activities
|
|
(131.9)
|
|
(43.3)
|
Effect of foreign
currency exchange rates on cash and cash equivalents
|
|
(4.7)
|
|
2.3
|
Decrease in cash and
cash equivalents
|
|
(15.8)
|
|
(52.7)
|
Cash and cash
equivalents, beginning of period
|
|
216.8
|
|
285.2
|
Cash and cash
equivalents, end of period
|
|
$
201.0
|
|
$
232.5
|
Common Questions & Answers (Unaudited)
(Dollars in
millions)
1. Can you provide a further
analysis of operating revenue by operating segment?
Operating revenue consists of the following components:
(In
millions)
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Local
Currency
|
|
Organic
Local
Currency
|
Operating
revenue:
|
|
2024
|
|
2023
|
|
$
Change
|
|
%
Change
|
|
% Change
(1)
|
|
% Change
(2)
|
Verification
Services
|
|
$
476.5
|
|
$
455.8
|
|
$
20.7
|
|
5 %
|
|
|
|
5 %
|
Employer
Services
|
|
126.3
|
|
140.5
|
|
(14.2)
|
|
(10) %
|
|
|
|
(10) %
|
Total Workforce
Solutions
|
|
602.8
|
|
596.3
|
|
6.5
|
|
1 %
|
|
|
|
1 %
|
Online Information
Solutions
|
|
380.2
|
|
341.0
|
|
39.2
|
|
12 %
|
|
|
|
12 %
|
Mortgage
Solutions
|
|
38.0
|
|
33.3
|
|
4.7
|
|
14 %
|
|
|
|
14 %
|
Financial Marketing
Services
|
|
47.1
|
|
47.4
|
|
(0.3)
|
|
(1) %
|
|
|
|
(1) %
|
Total U.S. Information
Solutions
|
|
465.3
|
|
421.7
|
|
43.6
|
|
10 %
|
|
|
|
10 %
|
Latin
America
|
|
91.1
|
|
55.3
|
|
35.8
|
|
65 %
|
|
102 %
|
|
19 %
|
Europe
|
|
86.2
|
|
75.7
|
|
10.5
|
|
14 %
|
|
10 %
|
|
10 %
|
Asia Pacific
|
|
78.2
|
|
89.9
|
|
(11.7)
|
|
(13) %
|
|
(10) %
|
|
(10) %
|
Canada
|
|
65.8
|
|
63.1
|
|
2.7
|
|
4 %
|
|
4 %
|
|
4 %
|
Total
International
|
|
321.3
|
|
284.0
|
|
37.3
|
|
13 %
|
|
20 %
|
|
6 %
|
Total operating
revenue
|
|
$
1,389.4
|
|
$
1,302.0
|
|
$
87.4
|
|
7 %
|
|
8 %
|
|
5 %
|
|
|
(1)
|
Local currency revenue
change is calculated by conforming 2024 results using 2023 exchange
rates.
|
|
|
(2)
|
Organic local currency
revenue growth is defined as local currency revenue growth,
adjusted to reflect an increase in prior year Equifax revenue from
the revenue of acquired companies in the prior year period. This
adjustment is made for 12 months following the
acquisition.
|
2. What is the estimate of the change in
overall U.S. mortgage market credit inquiry volume that is included
in the 2024 second quarter and full year guidance provided?
The change year over year in total U.S. mortgage market credit
inquiries received by Equifax in the first quarter of 2024 was a
decline of 19%. The guidance provided on page 3 assumes a change
year over year in total U.S. mortgage market credit inquiries
received by Equifax in the second quarter of 2024 to be a decline
of about 13%. For full year 2024, our guidance assumes a decline of
about 11%.
Reconciliations of Non-GAAP Financial Measures to the
Comparable GAAP Financial Measures (Unaudited)
(Dollars in
millions, except per share amounts)
A. Reconciliation of net income
attributable to Equifax to diluted EPS attributable to Equifax,
defined as net income adjusted for acquisition-related amortization
expense, accrual for legal and regulatory
matters related to the 2017 cybersecurity incident,
fair market value adjustment of equity investment, foreign currency
impact of certain intercompany loans, acquisition-related costs
other than acquisition amortization, income tax effect of stock
awards recognized upon vesting or settlement, Argentina highly inflationary foreign currency
adjustment and aggregated tax impact of these adjustments:
|
|
Three Months Ended
March 31,
|
|
|
|
|
(In millions, except
per share amounts)
|
|
2024
|
|
2023
|
|
$
Change
|
|
%
Change
|
Net income attributable
to Equifax
|
|
$
124.9
|
|
$
112.4
|
|
$
12.5
|
|
11 %
|
Acquisition-related
amortization expense of certain acquired intangibles
(1)
|
|
67.0
|
|
60.7
|
|
6.3
|
|
10 %
|
Accrual for legal and
regulatory matters related to the 2017 cybersecurity incident
(2)
|
|
0.1
|
|
0.4
|
|
(0.3)
|
|
(75) %
|
Fair market value
adjustment of equity investment (3)
|
|
—
|
|
(3.1)
|
|
3.1
|
|
nm
|
Foreign currency impact
of certain intercompany loans (4)
|
|
(0.4)
|
|
(0.1)
|
|
(0.3)
|
|
nm
|
Acquisition-related
costs other than acquisition amortization (5)
|
|
18.1
|
|
24.7
|
|
(6.6)
|
|
(27) %
|
Income tax effects of
stock awards that are recognized upon vesting or settlement
(6)
|
|
(4.0)
|
|
(1.7)
|
|
(2.3)
|
|
135 %
|
Argentina highly
inflationary foreign currency adjustment (7)
|
|
0.1
|
|
0.1
|
|
—
|
|
nm
|
Tax impact of
adjustments (8)
|
|
(18.8)
|
|
(16.6)
|
|
(2.2)
|
|
13 %
|
Net income attributable
to Equifax, adjusted for items listed above
|
|
$
187.0
|
|
$
176.8
|
|
$
10.2
|
|
6 %
|
Diluted EPS
attributable to Equifax, adjusted for items listed above
|
|
$
1.50
|
|
$
1.43
|
|
$
0.07
|
|
5 %
|
Weighted-average shares
used in computing diluted EPS
|
|
124.8
|
|
123.5
|
|
|
|
|
|
|
(1)
|
During the first
quarter of 2024, we recorded acquisition-related amortization
expense of certain acquired intangibles of $67.0 million ($53.2
million, net of tax). We calculate this financial measure by
excluding the impact of acquisition-related amortization expense
and including a benefit to reflect the significant cash income tax
savings resulting from the income tax deductibility of amortization
for certain acquired intangibles. The $13.8 million of tax is
comprised of $17.9 million of tax expense net of $4.1 million of a
cash income tax benefit. During the first quarter of 2023, we
recorded acquisition-related amortization expense of certain
acquired intangibles of $60.7 million ($49.3 million, net of tax).
The $11.4 million of tax is comprised of $15.5 million of tax
expense net of $4.1 million of a cash income tax benefit. See the
Notes to this reconciliation for additional detail.
|
|
|
(2)
|
During the first
quarter of 2024, we recorded an accrual for legal and regulatory
matters related to the 2017 cybersecurity incident of $0.1 million
($0.1 million, net of tax). During the first quarter of 2023, we
recorded an accrual for legal and regulatory matters related to the
2017 cybersecurity incident of $0.4 million ($0.3 million, net of
tax). See the Notes to this reconciliation for additional
detail.
|
|
|
(3)
|
During the first
quarter of 2023, we recorded an unrealized gain on the fair market
value adjustment of an equity investment of $3.1 million ($2.1
million, net of tax). The fair value adjustment was recorded to the
Other income, net line item within the Consolidated Statements of
Income. See the Notes to this reconciliation for additional
details.
|
|
|
(4)
|
During the first
quarter of 2024, we recorded a foreign currency gain on certain
intercompany loans of $0.4 million. During the first quarter of
2023, we recorded a foreign currency gain on certain intercompany
loans of $0.1 million. The impact was recorded to the Other income,
net line item within the Consolidated Statements of Income. See the
Notes to this reconciliation for additional detail.
|
|
|
(5)
|
During the first
quarter of 2024, we recorded $18.1 million ($13.1 million, net of
tax) for acquisition-related costs other than acquisition
amortization. During the first quarter of 2023, we recorded $24.7
million ($18.6 million, net of tax) for acquisition-related costs
other than acquisition amortization. These costs primarily related
to integration costs resulting from recent acquisition activity and
were recorded in operating income. See the Notes to this
reconciliation for additional detail.
|
|
|
(6)
|
During the first
quarter of 2024, we recorded a tax benefit of $4.0 million related
to the tax effects of deductions for stock compensation in excess
of amounts recorded for compensation costs. During the first
quarter of 2023, we recorded a tax benefit of $1.7 million related
to the tax effects of deductions for stock compensation expense in
excess of amounts recorded for compensation costs. See the Notes to
this reconciliation for additional detail.
|
|
|
(7)
|
Argentina experienced
multiple periods of increasing inflation rates, devaluation of the
peso, and increasing borrowing rates. As such, Argentina was deemed
a highly inflationary economy by accounting policymakers in 2018.
During the first quarter of both 2024 and 2023, we recorded a
foreign currency loss of $0.1 million related to the impact of
remeasuring the peso denominated monetary assets and liabilities as
a result of Argentina being a highly inflationary economy. See the
Notes to this reconciliation for additional detail.
|
|
|
(8)
|
During the first
quarter of 2024, we recorded the tax impact of adjustments of $18.8
million comprised of (i) acquisition-related amortization expense
of certain acquired intangibles of $13.8 million ($17.9 million of
tax expense net of $4.1 million of cash income tax benefit) and
(ii) a tax adjustment of $5.0 million related to
acquisition-related costs other than acquisition
amortization.
|
|
|
|
During the first
quarter of 2023, we recorded the tax impact of adjustments of
$16.6 million comprised of (i) acquisition-related
amortization expense of certain acquired intangibles of
$11.4 million ($15.5 million of tax expense net of
$4.1 million of cash income tax benefit), (ii) a tax
adjustment of $0.1 million related to an accrual for legal and
regulatory matters related to the 2017 cybersecurity incident,
(iii) a tax adjustment of $1.0 million related to the fair
value adjustment of equity investments and (iv) a tax adjustment of
$6.1 million related to acquisition-related costs other than
acquisition amortization.
|
B. Reconciliation of net income
attributable to Equifax to adjusted EBITDA, defined as net income
excluding income taxes, interest expense, net, depreciation and
amortization expense, accrual for legal and regulatory matters
related to the 2017 cybersecurity incident, fair market value
adjustment of equity investment, foreign currency impact of certain
intercompany loans, acquisition-related costs other than
acquisition amortization, Argentina highly inflationary foreign currency
adjustment and presentation of adjusted EBITDA
margin:
|
|
Three Months Ended
March 31,
|
|
|
|
|
(In
millions)
|
|
2024
|
|
2023
|
|
$
Change
|
|
%
Change
|
Revenue
|
|
$
1,389.4
|
|
$
1,302.0
|
|
$
87.4
|
|
7 %
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Equifax
|
|
$
124.9
|
|
$
112.4
|
|
$
12.5
|
|
11 %
|
Income taxes
|
|
40.5
|
|
38.7
|
|
1.8
|
|
5 %
|
Interest expense,
net*
|
|
56.9
|
|
56.4
|
|
0.5
|
|
1 %
|
Depreciation and
amortization
|
|
164.4
|
|
150.1
|
|
14.3
|
|
10 %
|
Accrual for legal and
regulatory matters related to 2017 cybersecurity incident
(1)
|
|
0.1
|
|
0.4
|
|
(0.3)
|
|
nm
|
Fair market value
adjustment of equity investment (2)
|
|
—
|
|
(3.1)
|
|
3.1
|
|
nm
|
Foreign currency impact
of certain intercompany loans (3)
|
|
(0.4)
|
|
(0.1)
|
|
(0.3)
|
|
nm
|
Acquisition-related
amounts other than acquisition amortization
(4)
|
|
18.1
|
|
24.7
|
|
(6.6)
|
|
(27) %
|
Argentina highly
inflationary foreign currency adjustment (5)
|
|
0.1
|
|
0.1
|
|
—
|
|
nm
|
Adjusted EBITDA,
excluding the items listed above
|
|
$
404.6
|
|
$
379.6
|
|
$
25.0
|
|
7 %
|
Adjusted EBITDA
margin
|
|
29.1 %
|
|
29.2 %
|
|
|
|
|
|
nm
- not meaningful
|
*Excludes interest income of $2.8 million in 2024 and $1.2
million in 2023.
|
|
|
(1)
|
During the first
quarter of 2024, we recorded an accrual for legal and regulatory
matters related to the 2017 cybersecurity incident of $0.1 million
($0.1 million, net of tax). During the first quarter of 2023, we
recorded an accrual for legal and regulatory matters related to the
2017 cybersecurity incident of $0.4 million ($0.3 million, net of
tax). See the Notes to this reconciliation for additional
detail.
|
|
|
(2)
|
During the first
quarter of 2023, we recorded an unrealized gain on the fair market
value adjustment of an equity investment of $3.1 million ($2.1
million, net of tax). The fair value adjustment was recorded to the
Other income, net line item within the Consolidated Statements of
Income. See the Notes to this reconciliation for additional
details.
|
|
|
(3)
|
During the first
quarter of 2024, we recorded a foreign currency gain on certain
intercompany loans of $0.4 million. During the first quarter of
2023, we recorded a foreign currency gain on certain intercompany
loans of $0.1 million. See the Notes to this reconciliation for
additional detail.
|
|
|
(4)
|
During the first
quarter of 2024, we recorded $18.1 million ($13.1 million, net of
tax) for acquisition-related costs other than acquisition
amortization. During the first quarter of 2023, we recorded $24.7
million ($18.6 million, net of tax) for acquisition-related costs
other than acquisition amortization. These costs primarily related
to integration costs resulting from recent acquisition activity and
were recorded in operating income. See the Notes to this
reconciliation for additional detail.
|
|
|
(5)
|
Argentina experienced
multiple periods of increasing inflation rates, devaluation of the
peso, and increasing borrowing rates. As such, Argentina was deemed
a highly inflationary economy by accounting policymakers in 2018.
During the first quarter of both 2024 and 2023, we recorded a
foreign currency loss of $0.1 million related to the impact of
remeasuring the peso denominated monetary assets and liabilities as
a result of Argentina being a highly inflationary economy. See the
Notes to this reconciliation for additional detail.
|
C. Reconciliation of operating income by
segment to Adjusted EBITDA, excluding depreciation and amortization
expense, other income, net, noncontrolling interest, accrual for
legal and regulatory matters related to the 2017 cybersecurity
incident, fair market value adjustment of equity investment,
foreign currency impact of certain intercompany loans,
acquisition-related costs other than acquisition amortization,
Argentina highly inflationary
foreign currency adjustment and presentation of adjusted EBITDA
margin for each of the segments:
(In
millions)
|
Three Months Ended
March 31, 2024
|
|
|
Workforce
Solutions
|
|
U.S.
Information
Solutions
|
|
International
|
|
|
General
Corporate
Expense
|
|
Total
|
|
|
|
|
|
|
Revenue
|
|
$
602.8
|
|
$
465.3
|
|
$
321.3
|
|
|
—
|
|
$
1,389.4
|
Operating
income
|
|
255.1
|
|
92.6
|
|
31.9
|
|
|
(154.9)
|
|
224.7
|
Depreciation and
amortization
|
|
44.3
|
|
56.4
|
|
44.5
|
|
|
19.2
|
|
164.4
|
Other (expense) income,
net*
|
|
—
|
|
(0.1)
|
|
0.3
|
|
|
(1.4)
|
|
(1.2)
|
Noncontrolling
interest
|
|
—
|
|
—
|
|
(1.2)
|
|
|
—
|
|
(1.2)
|
Adjustments
(1)
|
|
8.5
|
|
3.4
|
|
2.7
|
|
|
3.3
|
|
17.9
|
Adjusted
EBITDA
|
|
$
307.9
|
|
$
152.3
|
|
$
78.2
|
|
|
$
(133.8)
|
|
$
404.6
|
Operating
margin
|
|
42.3 %
|
|
19.9 %
|
|
9.9 %
|
|
|
nm
|
|
16.2 %
|
Adjusted EBITDA
margin
|
|
51.1 %
|
|
32.7 %
|
|
24.3 %
|
|
|
nm
|
|
29.1 %
|
|
nm - not
meaningful
|
*Excludes interest
income of $2.6 million in International and $0.2 million in General
Corporate Expense.
|
(In
millions)
|
|
Three Months Ended
March 31, 2023
|
|
|
Workforce
Solutions
|
|
U.S.
Information
Solutions
|
|
International
|
|
|
General
Corporate
Expense
|
|
Total
|
|
|
|
|
|
|
Revenue
|
|
$
596.3
|
|
$
421.7
|
|
$
284.0
|
|
|
—
|
|
$
1,302.0
|
Operating
income
|
|
248.7
|
|
78.6
|
|
32.7
|
|
|
(154.6)
|
|
205.4
|
Depreciation and
amortization
|
|
43.3
|
|
51.6
|
|
32.5
|
|
|
22.7
|
|
150.1
|
Other income (expense),
net*
|
|
—
|
|
—
|
|
4.7
|
|
|
(1.5)
|
|
3.2
|
Noncontrolling
interest
|
|
—
|
|
—
|
|
(1.1)
|
|
|
—
|
|
(1.1)
|
Adjustments
(1)
|
|
8.8
|
|
7.1
|
|
(2.0)
|
|
|
8.1
|
|
22.0
|
Adjusted
EBITDA
|
|
$
300.8
|
|
$
137.3
|
|
$
66.8
|
|
|
$
(125.3)
|
|
$
379.6
|
Operating
margin
|
|
41.7 %
|
|
18.6 %
|
|
11.5 %
|
|
|
nm
|
|
15.8 %
|
Adjusted EBITDA
margin
|
|
50.4 %
|
|
32.6 %
|
|
23.5 %
|
|
|
nm
|
|
29.2 %
|
|
nm - not
meaningful
|
*Excludes interest
income of $0.8 million in International and $0.4 million in General
Corporate Expense.
|
(1)
|
During the first
quarter of 2024, we recorded pre-tax expenses of $0.1 million for
an accrual for legal and regulatory matters related to the 2017
cybersecurity incident, a $0.4 million foreign currency gain on
certain intercompany loans, $18.1 million for acquisition-related
costs other than acquisition amortization and a foreign currency
loss of $0.1 million related to the impact of remeasuring the peso
denominated monetary assets and liabilities as a result of
Argentina being a highly inflationary economy.
|
|
|
|
During the first
quarter of 2023, we recorded pre-tax expenses of $0.4 million for
an accrual for legal and regulatory matters related to the 2017
cybersecurity incident, a $3.1 million unrealized gain on the fair
market value adjustment of equity investments, a $0.1 million
foreign currency gain on certain intercompany loans, $24.7 million
in acquisition-related costs other than acquisition amortization
and a $0.1 million foreign currency loss related to the impact of
remeasuring the peso denominated monetary assets and liabilities as
a result of Argentina being a highly inflationary
economy.
|
Notes to Reconciliations of Non-GAAP Financial Measures to
the Comparable GAAP Financial Measures
Diluted EPS attributable to Equifax is adjusted for the
following items:
Acquisition-related amortization expense - During the
first quarter of 2024 and 2023, we recorded acquisition-related
amortization expense of certain acquired intangibles of
$67.0 million ($53.2 million, net of tax) and $60.7 million ($49.3 million, net of tax), respectively. We
calculate this financial measure by excluding the impact of
acquisition-related amortization expense and including a benefit to
reflect the material cash income tax savings resulting from the
income tax deductibility of amortization for certain acquired
intangibles. These financial measures are not prepared in
conformity with GAAP. Management believes excluding the impact of
amortization expense is useful because excluding
acquisition-related amortization and other items that are not
comparable allows investors to evaluate our performance for
different periods on a more comparable basis. Certain acquired
intangibles result in material cash income tax savings which are
not reflected in earnings. Management believes that including a
benefit to reflect the cash income tax savings is useful as it
allows investors to better value Equifax. Management makes these
adjustments to earnings when measuring profitability, evaluating
performance trends, setting performance objectives and calculating
our return on invested capital.
Accrual for legal and regulatory matters related to the 2017
cybersecurity incident - Accrual for legal and regulatory
matters related to the 2017 cybersecurity incident includes legal
fees to respond to subsequent litigation and government
investigations for both periods presented. During the first quarter
of 2024, we recorded an accrual for legal and regulatory matters
related to the 2017 cybersecurity incident of $0.1 million ($0.1 million, net of tax). During the first
quarter of 2023, we recorded an accrual for legal and regulatory
matters related to the 2017 cybersecurity incident of $0.4 million ($0.3 million, net of tax). Management
believes excluding these charges is useful as it allows investors
to evaluate our performance for different periods on a more
comparable basis. Management makes these adjustments to net income
when measuring profitability, evaluating performance trends,
setting performance objectives and calculating our return on
invested capital. This is consistent with how management reviews
and assesses Equifax's historical performance and is useful when
planning, forecasting and analyzing future periods.
Fair market value adjustment of equity
investment - On August 7,
2023, we purchased the remaining interest of our equity
investment in Brazil. Prior to the
acquisition, the investment in Brazil was adjusted to fair value at the end
of each reporting period, with unrealized gains or losses recorded
within the Consolidated Statements of Income in Other income, net.
During the first quarter of 2023, we recorded a $3.1 million ($2.1 million, net of tax) unrealized gain
related to adjusting our investment in Brazil to fair market value. Management
believes excluding this charge from certain financial results
provides meaningful supplemental information regarding our
financial results for the three months ended March 31, 2023, since the non-operating gain is
not comparable among the periods. This is consistent with how our
management reviews and assesses Equifax's historical performance
and is useful when planning, forecasting and analyzing future
periods.
Foreign currency impact of certain intercompany loans
- During the first quarter of 2024 and 2023, we recorded a
gain of $0.4 million and
$0.1 million, respectively,
related to foreign currency impact of certain intercompany loans.
Management believes excluding this charge is useful as it allows
investors to evaluate our performance for different periods on a
more comparable basis. This is consistent with how management
reviews and assesses Equifax's historical performance and is useful
when planning, forecasting and analyzing future periods.
Acquisition-related costs other than acquisition
amortization - During the first quarter of 2024 and
2023, we recorded $18.1 million
($13.1 million, net of tax) and
$24.7 million ($18.6 million, net of tax), respectively,
for acquisition-related costs other than acquisition amortization.
These costs primarily related to integration costs resulting from
recent acquisitions and were recorded in operating income.
Management believes excluding this charge from certain financial
results provides meaningful supplemental information regarding our
financial results, since a charge of such an amount is not
comparable among the periods. This is consistent with how our
management reviews and assesses Equifax's historical performance
and is useful when planning, forecasting, and analyzing future
periods.
Income tax effects of stock awards that are recognized upon
vesting or settlement - During the first quarter of 2024,
we recorded a tax benefit of $4.0
million related to the tax effects of deductions for stock
compensation in excess of amounts recorded for compensation costs.
During the first quarter of 2023, we recorded a tax benefit of
$1.7 million related to the tax
effects of deductions for stock compensation in excess of amounts
recorded for compensation costs. Management believes excluding this
tax effect from financial results provides meaningful supplemental
information regarding our financial results for the three months
ended March 31, 2024 and 2023 because these amounts are
non-operating and relate to income tax benefits or deficiencies for
stock awards recognized when tax amounts differ from recognized
stock compensation cost. This is consistent with how management
reviews and assesses Equifax's historical performance and is useful
when planning, forecasting and analyzing future periods.
Argentina highly
inflationary foreign currency adjustment - Argentina
experienced multiple periods of increasing inflation rates,
devaluation of the peso, and increasing borrowing rates. As such,
Argentina was deemed a highly
inflationary economy by accounting policymakers. We recorded a
foreign currency loss of $0.1 million
during the first quarter of 2024 and 2023 as a result of
remeasuring the peso denominated monetary assets and liabilities
due to Argentina being highly
inflationary. Management believes excluding this charge is useful
as it allows investors to evaluate our performance for different
periods on a more comparable basis. This is consistent with how
management reviews and assesses Equifax's historical performance
and is useful when planning, forecasting and analyzing future
periods.
Adjusted EBITDA and EBITDA margin - Management
defines adjusted EBITDA as consolidated net income attributable to
Equifax plus net interest expense, income taxes, depreciation and
amortization and also excludes certain one-time items. Management
believes the use of adjusted EBITDA and adjusted EBITDA margin
allows investors to evaluate our performance for different periods
on a more comparable basis.
Contact:
|
|
|
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Trevor Burns
|
Kate Walker
|
Investor
Relations
|
Media
Relations
|
trevor.burns@equifax.com
|
mediainquiries@equifax.com
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SOURCE Equifax Inc.