Equifax, Inc. (EFX)

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Equifax Inc. (EFX)

Q1 2010 Earnings Call

April 29, 2010 8:30 am ET


Jeff Dodge - IR

Rick Smith - Chairman and CEO

Lee Adrean - CFO


Carter Malloy - Stephens

Andrew Jeffrey - SunTrust

George Mihalos - Banc of America

Shlomo Rosenbaum - Stifel Nicolaus

Michael Meltz - JPMorgan

Dan Leben - Robert W. Baird



Good day everyone and welcome to the Equifax first quarter 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.

Jeff Dodge

Good morning and welcome to today’s conference call. I’m Jeff Dodge, Investor Relations and with me are Rick Smith, our 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 of 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 business are set forth in the filings with the SEC, including our 2009 Form 10-K and subsequent filings.

During this call, we will refer to certain non-GAAP financial measures, which are explained in the non-GAAP financial measures reconciliation attached to our earnings release, including adjusted net income and adjusted operating margin. These measures exclude the $8.4 million restructuring charges that we reported in the first quarter of 2009, adjusted diluted EPS and non-GAAP financial measures includes the result of discontinued operations, but excludes the restructuring charge taken in the first quarter of 2009 and the acquisition related amortization expense.

Please refer to the non-GAAP reconciliation section included in the earnings release and 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.

Rick Smith

Thanks, Jeff good morning, everyone. Our first quarter results were very encouraging. We ended the quarter pretty much inline with our expectations and we saw strengthening in trends as the quarter progressed. As for the numbers the total revenue for the quarter was $461.3 million, up 3% on a reported basis and flat on a constant dollar basis in the first quarter of last year.

The operating margin was 23.3%, up slightly when compared to the fourth quarter adjusted operating margins of 23.2%, adjusted EPS was $0.56 0which is inline with the outlook we gave during the fourth quarter earnings release. As I stated today, my optimism for the full-year has improved.

Given how we ended the quarter and as four of our five business units deliver constant dollar revenue growth over the prior year. Here is some details, first on the Online Consumer Information Solutions operating margin were up slightly compared to fourth quarter 2009. As we continued to gain traction in some of our newer online products such as we’ve always focused on consumer’s income and ability to pay, I’ll talk about that in some detail later on.

Despite of 35% reduction in the mortgage application index, the Work Number verifications actually grew 5%, during the quarter due to strength in collections, government and consumer finance. The mortgage portion started slowly for the Work Number towards six, seven weeks and then finished strong over the remaining four or five weeks of the quarter, given the confidence as we go into the second quarter.

Personal Solutions, we exceeded our expectations for both revenue growth and operating margins, its direct-to-consumer branded description business grew by over 13%. Also this quarter represents the first quarterly year-over-year growth since the third quarter of 2008 as the team has done a fantastic job on executing the number changes in experience that our online customers have.

I think North America’s commercials, US commercial and risk marketing business delivered strong double-digit growth by the business segment exceeded our expectations for those revenue growths and operating margin in the quarter. International continued to make progress in many of its markets in net of our expectations for revenue growth for the quarter.

We’ve talked many times about our four pillars of growth strategy, one, increased share of customers spend. Two, increased penetration of technology and networking services; three, differential data that is unique from a competition, by full expansion into key emerging markets as I’ll talk about all four of those now.

As you know to-date, we’ve made some very important strategic acquisitions. We’ve introduced the number of very unique products. We brought many of our existing customer relationships and develop significant new customer relationships based on superior value of our products and services.

Today, I want to take you through some very real live examples, but how the strategies playing out in the marketplace and with our customers and allowing us to gain market share. According to the charm the 360 degree deal of the customer, you could as talk about that in the past, where we display the powerful insights our customers gain, and they leverage the benefits of our employment, our income, our wealth and our tough going utility data combined with our credit data brought them a better decisions in an increasingly challenging competitive environment.

I’m going to walk you through now some specific examples where we gained share over the first three months of 2010. In the first quarter, we signed a multiyear deal with $25 million to $30 million with the major insurance company, increasing our shares selected core product offerings from a very small share to 100%.

Read the rest of this transcript for free on seekingalpha.com