Equifax, Inc. (EFX)

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Equifax (EFX)

Q1 2013 Earnings Call

April 25, 2013 8:30 am ET


Jeffrey L. Dodge - Senior Vice President of Investor Relations

Richard F. Smith - Chairman and Chief Executive Officer

Lee Adrean - Chief Financial Officer and Corporate Vice President


Molly R. McGarrett - JP Morgan Chase & Co, Research Division

Manav Patnaik - Barclays Capital, Research Division

Andrew W. Jeffrey - SunTrust Robinson Humphrey, Inc., Research Division

Daniel R. Perlin - RBC Capital Markets, LLC, Research Division

Carter Malloy - Stephens Inc., Research Division

Paul Ginocchio - Deutsche Bank AG, Research Division

Julio C. Quinteros - Goldman Sachs Group Inc., Research Division

Jeffrey P. Meuler - Robert W. Baird & Co. Incorporated, Research Division

Shlomo H. Rosenbaum - Stifel, Nicolaus & Co., Inc., Research Division

David Togut - Evercore Partners Inc., Research Division



Good day, and welcome to the Quarter 1 2013 Equifax Earnings Release Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Jeff Dodge. Please go ahead, sir.

Jeffrey L. Dodge

Thanks, and good morning. Welcome to today's conference call. I'm Jeff Dodge, Investor Relations. And with me today are Rick Smith, Chairman and Chief Executive Officer; and Lee Adrean, Chief Financial Officer.

Today's call is being recorded. An archive of the recording will be available later today in the Investor Relations section in the About Equifax tab of our website at www.equifax.com.

During this call, we'll be making certain forward-looking statements to help you understand Equifax and its business environment. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from our expectations. Certain risk factors inherent in our businesses are set forth in the filings with the SEC, including our 2012 Form 10-K and subsequent filings.

We will also refer to our non-GAAP financial measure, adjusted diluted EPS attributable to Equifax. Adjusted diluted EPS attributable to Equifax excludes acquisition-related amortization expense. This measure is detailed in our non-GAAP reconciliation table, which is included with our earnings release and also posted on our website.

Also, please refer to our various investor presentations, which are posted in the Investor Relations section under the About Equifax tab on our website for further details.

Now I'd like to turn it over to Rick.

Richard F. Smith

Thanks, Jeff, and good morning, everyone. Thanks for joining us again this morning. Our performance for the first quarter 2013 was, in my opinion, strong and was broad-based, as 4 of our 5 operating segments delivered strong double-digit growth for the quarter. This performance -- a lot of the performance was primarily driven by the continued broadening [ph] focus of each of our business units as one of our most important strategic initiatives. They're all continuing to execute well and have energized their organizations to innovate and identify new and expanded opportunities for growth.

Take a quick look at the high level of the quarter. Revenue was $567 million, up 12% from the first quarter of a year ago. Margin was 26.3%, up from 25.4% last year. And EPS was $0.87, up 26% from $0.69 a year ago. So to put things into context, those results compared favorably to the annual outlook we provided in December then again in January of 10% to 12% revenue growth and operating margins in the range of 26% to 27%. We also guided in February adjusted EPS growth of 21% to 24%. So a solid financial quarter and broad-based.

In addition to the financial performances, the business continues to improve their market position by delivering high levels of innovation, analytics and customer service. As I always do, I'll kind of go through some highlights for each of the business units, and I'll also give you a sense for each business unit, what the outlook looks like for the second quarter of 2013.

The focus for USCIS for the quarter, obviously, was integrating our new central region, which was the acquisition of CSC, and preparing that organization to deliver accelerated core non-mortgage growth in 2013 and beyond. We've organized the CSC acquisition into what we now call, again, our Central Region. A number of activities are underway to train the sales force, integrate them into joint account planning and rightsize the organization to eliminate unnecessary redundancies. Rudy and his team are off to a very good start.

During the first -- during the quarter, USCIS also launched the first phase of our analytical sandbox approach for our second top core bank. We've talked about this concept of sandbox a few times in the past. And while it's now gone live a lot of great excitement there. There's a lot to be done in the weeks and months ahead, but this is a clear example of how we are leading and innovating for our customers. The database will be extraordinary broad-based, including our data, our clients' data, scores, attributes and potentially third-party data, where needed. With our modeling and analytical platform, this customer can brainstorm, test, validate and produce models to significantly improve their decision-making with consumers and small businesses.

With our unique Decision 360 data assets, intimate knowledge of the banks' modeling challenges, a dedicated relationship team and understanding of the clients' complex data consumption requirements, we are uniquely qualified for this type of opportunity. It's really exciting to see us take our relationship with these big banks to a whole new level strategically.

Finally, we continue to make good progress on the verticalization of our sales organization in USCIS. Growth is beginning to accelerate in some of our focus areas. For example, we created late last year a vertical around the automotive segment in the U.S. And in the first quarter, the automotive vertical exceeded 10% growth, while the market grew at approximately 6%.

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