) posted second-quarter 2013 adjusted earnings per share (EPS) of
92 cents, beating the Zacks Consensus Estimate of 90 cents.
Results were up 27.8% from the year-ago quarter.
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Revenues grew 14.3% year over year to $586.9 million. The
quarter's result was better than the Zacks Consensus Estimate of
$582.0 million. The upside is attributable to top-line growth
across the board.
Segment wise, total U.S. Consumer Information Solutions (USCIS)
revenues were $259.7 million, up 19.0% from the year-ago quarter.
Among sub-segments, strong growth was noticed in Mortgage
Solutions Services (up 38.0%), followed by the Consumer Financial
Marketing Services segment (up 17.0%) and Online Consumer
Information Solutions (up 17.0%).
International revenues (including Europe, Canada and Latin
America) grew 9.0% year over year to $129.8 million, mostly due
to 14.0% growth in the Europe segment, 7.0% in the Canada
Consumer segment, followed by 5.0% growth in the Latin America
Revenues from the Workforce Solutions segment increased 12.0%
year over year to $123.2 million. The upside resulted from a
21.0% year-over-year increase in Verification Services revenues,
partially offset by flat Employer Services revenues.
North American Personal Solutions contributed $51.5 million,
reflecting 12.0% year-over-year improvement. North American
Commercial Solutions generated $22.7 million, up 12.0% from the
Gross margin in the second quarter was 66.2%, up 270 basis points
from 63.5% reported in the year-ago quarter. Operating margin was
26.9% as against 25.1% a year ago. Margin performance was better
in the Workforce solution, North America Personal Solution and
North America Commercial Solution segment. This was somewhat
offset by weak performances in USCIS and International.
The company reported higher operating expenses with selling,
general and administrative expenditure increasing 18.9% year over
On a GAAP basis, net income from continuing operations was $90.5
million or 73 cents per share versus $74.1 million or 60 cents
per share in the comparable quarter last year. Excluding the
impact of acquisition-related amortization expense, net of tax,
adjusted net income was $113.4 million or 92 cents per share, up
29.0% from $88.0 million or 72 cents in the year-ago quarter.
Balance Sheet & Cash Flow
Equifax exited the quarter with $104.9 million in cash and cash
equivalents, down from $107.6 million in the previous quarter.
Accounts receivables were $318.5 million, up from $310.4 million
in the previous quarter. Total long-term debt was $1.43 billion,
slightly down from $1.45 billion in the prior quarter. Cash
provided by operating activities was $140.5 million compared with
$66.3 million in the prior quarter.
Considering the recent domestic and international business
activities, current foreign exchange rates and the expected
slowdown in mortgage activities, the company expects consolidated
revenues for fiscal 2013 to grow 10.0%-12.0% year over year.
Adjusted earnings per share are expected to grow in the range of
21%-23% from the year-ago quarter.
Equifax believes that synergies from the acquisition of Computer
Sciences Corp.'s Credit Services unit and momentum in core as
well as non-mortgage activities will help the company achieve its
full year targets.
Equifax exited the second quarter beating the Zacks Consensus
Estimate on both the top and bottom lines. We are optimistic
about Equifax' revenue growth prospects and margin expansion
Management's efforts such as strategic initiatives for product
innovation, expansion of data assets through acquisitions and
continuous share gains in North America were encouraging.
Given the company's strong correlation to consumer and financial
markets as well as its U.S. and European exposure, we see a
gradual improvement in results. Moreover, improving mortgage
environment is a big positive for the stock. But stiff
Automatic Data Processing Inc.
) and uncertainty in the mortgage sector are concerns.
Currently, Equifax has a Zacks Rank #4.