) posted fourth-quarter 2012 adjusted earnings per share (EPS) of
78 cents, beating the Zacks Consensus Estimate by 3 cents.
Results were up 14.0% from the year-ago quarter. Adjusted EPS
excludes the impact of CSC Credit Services acquisition fees, the
pension settlement, certain income tax items and
acquisition-related amortization expense, net of tax.
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Revenues grew 9.5% year over year to $558.1 million. The revenue
figure was at the higher end of the company's expected growth
range and above the Zacks Consensus Estimate of $556.0 million.
The upside could be attributed to top-line growth across the
Segment wise, total U.S. Consumer Information Solutions (USCIS)
revenues were $235.7 million, up 9.0% from the year-ago quarter.
Among sub-segments, strong growth was noticed in Mortgage
Solutions Services (up 28.0%), followed by Online Consumer
Information Solutions (up 8.0%). The company witnessed a
deceleration in its Consumer Financial Marketing Services segment
International (including Europe, Canada and Latin America)
revenues grew 7.0% year over year to $124.7 million, mostly due
to 10.0% growth recognized in Canada Consumer segment, 8.0% in
Latin America and 4.0% in Europe.
Revenues from the Workforce Solutions segment increased 11.0%
year over year to $117.2 million. The upside resulted from a
27.0% year-over-year increase in Verification Services revenues,
partially offset by a 6.0% decline in Employer Services revenues.
North American Personal Solutions contributed $52.9 million,
reflecting 16.0% year-over-year improvement. North American
Commercial Solutions generated $27.6 million, up 4.0% from the
Gross margin in the fourth quarter was 61.3%, down 110 basis
points from the year-ago quarter. Operating margin was 17.1% as
against 24.7% a year ago. The margin performance was better in
International and flat in USCIS and North America Commercial
Solutions, offset by weak performances of North America Personal
Solutions and Workforce Solutions segments.
The company reported higher operating expenses with selling,
general and administrative expenditure increasing 36.5% year over
year. Depreciation and amortization expenses decreased 1.5% to
On a GAAP basis, net income from continuing operations was $46.3
million or 38 cents per share versus $72.9 million or 60 cents
per share in the comparable quarter last year. Excluding the
impact of CSC Credit Services acquisition fees, the pension
settlement, certain income tax items and acquisition-related
amortization expense, net of tax, adjusted net income was $94.9
million or 78 cents per share, up 14.3% from $83.0 million or 68
cents in the year-ago quarter.
Balance Sheet & Cash Flow
Equifax exited the quarter with $146.8 million in cash and cash
equivalents, down from $267.2 million in the previous quarter.
Accounts receivables were $317.0 million. Total long-term debt
was $1.45 billion, up from $968.3 million in the prior quarter.
Cash provided by operating activities was $144.2 million compared
with $151.7 million in the prior quarter.
Equifax' board approved a 22.0% increase in quarterly cash
dividend payout rate. The company will now pay dividend per share
of 22 cents (previously 18 cents) on Mar 15, 2013 to shareholders
of record as of Feb 22.
For the first quarter of 2013, Equifax expects revenues to be up
10.0% to 12.0% from the year-ago quarter, based on contributions
from domestic and international businesses and ongoing foreign
exchange rates. Excluding the impact of acquisition-related
amortization expense, Equifax expects adjusted EPS to range
between 84 cents and 87 cents, reflecting a year-over-year
increase of 20.0%-24.0%. The Zacks Consensus Estimate for the
first quarter is 88 cents, which is higher than the company's
For fiscal 2013, revenues are expected to grow in the range of
10.0% to 12.0% and adjusted EPS is expected between $3.56 and
$3.64. The Zacks Consensus Estimate for fiscal 2013 is $3.61,
which is toward the higher end of the company's guidance.
The company also mentioned that with the acquisition of
Computer Sciences Corp.
) credit solutions business, it will be able to boost operating
leverage as well as profitability.
Equifax exited the fourth quarter with flying colors, surpassing
the Zacks Consensus Estimate on both the top and bottom lines. We
are optimistic about Equifax' revenue growth prospects but margin
deceleration keeps us concerned.
Management's efforts regarding strategic initiatives for product
innovation, broadening 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.
) is a concern.
Currently, Equifax has a Zacks Rank #2 (Buy).