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Equifax (EFX) Beats on Q2 Earnings & Revenues, Ups View
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Keeping its earnings streak alive for the sixth time in a row, Equifax Inc. (EFX - Free Report) reported better-than-expected results in the second quarter of 2016. The company’s adjusted earnings (excluding amortization expenses, Veda Group acquisition-related charges and other one-time items) per share from continuing operations of $1.43 surpassed the Zacks Consensus Estimate of $1.36 and jumped 24% year over year.
On a GAAP basis, the company reported earnings of $1.08 per share, up from the year-ago quarter tally of 92 cents.
Equifax’s revenues of $811.3 million came ahead of both the Zacks Consensus Estimate of $804.0 million and management’s guided range of $795–$805 million. The figure was also up 19.6% on a year-over-year basis.
Since the first quarter of 2016, the company has been making slight changes in its reportable segments. The U.S. Information Solutions (USIS) and Workforce Solutions remained unchanged, while Personal Solutions has been renamed to Global Consumer Solutions. Under the International segment, Equifax has “created a new Asia Pacific reporting unit, including the Veda acquisition as well as TDX Australia and India operations, which previously were part of the Europe reporting unit.”
Segment-wise, total USIS revenues were up 3% year over year to $307.9 million. Among its sub-segments, growth was recorded in Online Information Solutions (2%), Mortgage Solutions Services (6%) and Financial Marketing Services (7%).
International revenues (including Europe, the Asia-Pacific, Canada and Latin America) surged 51% year over year to $218.8 million. On a constant-currency basis, revenues soared 62%. Growth was mainly driven by the Veda Group acquisition, which increased the Asia-Pacific’s contribution to revenues to $72.3 million from $1.9 million. Moreover, the company registered an increase of 12% in Europe. However, revenues from Latin America dropped 8% while Canada’s revenues were flat.
Revenues from the Workforce Solutions segment surged 21% year over year to $177.3 million, primarily on the back of 17% revenue growth in Verification Services and 29% in Employer Services.
Global Consumer Solutions contributed $107.3 million to the total revenue, reflecting a 21% year-over-year jump.
Equifax’s adjusted operating income increased 24% to $279.3 million. Consequently, adjusted operating margin expanded 120 basis points (bps) to 34.4%. Adjusted net income came in at $172.7 million or $1.43 per share, compared with $139.1 million or $1.15 per share reported a year ago.
Equifax exited the quarter with $96.8 million in cash and cash equivalents, unchanged from the balance at the end of first-quarter 2016. Total long-term debt (excluding current portion) increased to approximately $2.5 billion from $1.88 billion at the end of first-quarter 2016 mainly due to the acquisition of Veda Group. During the first half of 2016, Equifax generated cash flow of $279.5 million from operational activities. The company paid $78.6 million as dividends in the first six months of 2016.
Guidance
Buoyed by strong second-quarter results, Equifax raised its guidance for the full year. The company now expects revenues between $3.13 billion and $3.16 billion (midpoint: $3.145 billion), compared to its earlier projection of $3.05–$3.15 billion (midpoint: $3.10 billion). The revenue outlook at the midpoint is above the Zacks Consensus Estimate of $3.12 billion.
Adjusted earnings per share are now forecasted to be between $5.35 and $5.40 (midpoint: $5.375), compared to the previous projection of $5.15–$5.25 (midpoint: $5.20). The earnings guidance at the midpoint is above the Zacks Consensus Estimate of $5.24.
Coming to the third-quarter outlook, Equifax projects revenues in the range of $795 million to $805 million (midpoint: $800 million), while the Zacks Consensus Estimate is $793.31 million. Adjusted earnings per share are projected to be between $1.33 and $1.36 (midpoint: $1.345). The Zacks Consensus Estimate is pegged lower at $1.32.
Our Take
Equifax posted better-than-expected results for the first quarter, which also registered year-over–year growth. Moreover, the company issued an encouraging outlook for the third quarter, wherein both the revenue and earnings guidance were above the respective Zacks Consensus Estimate at the midpoint. Furthermore, upbeat full-year guidance for both revenues and earnings indicates that that its growth initiatives aimed in the right direction.
Management’s efforts, such as strategic initiatives for product innovation, expansion of data assets through acquisitions and continuous share gains in North America, should provide tailwinds. Also, the company’s strong correlation with the consumer and financial markets as well as exposure in the U.S. and Europe are likely to propel growth, going ahead.
However, competition from the likes of Automatic Data Processing Inc. (ADP - Free Report) , Fiserv Inc. and Moody’s Corp. (MCO - Free Report) , along with uncertainty in the mortgage sector, raises concerns.
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Equifax (EFX) Beats on Q2 Earnings & Revenues, Ups View
Keeping its earnings streak alive for the sixth time in a row, Equifax Inc. (EFX - Free Report) reported better-than-expected results in the second quarter of 2016. The company’s adjusted earnings (excluding amortization expenses, Veda Group acquisition-related charges and other one-time items) per share from continuing operations of $1.43 surpassed the Zacks Consensus Estimate of $1.36 and jumped 24% year over year.
On a GAAP basis, the company reported earnings of $1.08 per share, up from the year-ago quarter tally of 92 cents.
Details of the Quarter
Equifax’s revenues of $811.3 million came ahead of both the Zacks Consensus Estimate of $804.0 million and management’s guided range of $795–$805 million. The figure was also up 19.6% on a year-over-year basis.
Since the first quarter of 2016, the company has been making slight changes in its reportable segments. The U.S. Information Solutions (USIS) and Workforce Solutions remained unchanged, while Personal Solutions has been renamed to Global Consumer Solutions. Under the International segment, Equifax has “created a new Asia Pacific reporting unit, including the Veda acquisition as well as TDX Australia and India operations, which previously were part of the Europe reporting unit.”
Segment-wise, total USIS revenues were up 3% year over year to $307.9 million. Among its sub-segments, growth was recorded in Online Information Solutions (2%), Mortgage Solutions Services (6%) and Financial Marketing Services (7%).
International revenues (including Europe, the Asia-Pacific, Canada and Latin America) surged 51% year over year to $218.8 million. On a constant-currency basis, revenues soared 62%. Growth was mainly driven by the Veda Group acquisition, which increased the Asia-Pacific’s contribution to revenues to $72.3 million from $1.9 million. Moreover, the company registered an increase of 12% in Europe. However, revenues from Latin America dropped 8% while Canada’s revenues were flat.
Revenues from the Workforce Solutions segment surged 21% year over year to $177.3 million, primarily on the back of 17% revenue growth in Verification Services and 29% in Employer Services.
Global Consumer Solutions contributed $107.3 million to the total revenue, reflecting a 21% year-over-year jump.
Equifax’s adjusted operating income increased 24% to $279.3 million. Consequently, adjusted operating margin expanded 120 basis points (bps) to 34.4%. Adjusted net income came in at $172.7 million or $1.43 per share, compared with $139.1 million or $1.15 per share reported a year ago.
Equifax exited the quarter with $96.8 million in cash and cash equivalents, unchanged from the balance at the end of first-quarter 2016. Total long-term debt (excluding current portion) increased to approximately $2.5 billion from $1.88 billion at the end of first-quarter 2016 mainly due to the acquisition of Veda Group. During the first half of 2016, Equifax generated cash flow of $279.5 million from operational activities. The company paid $78.6 million as dividends in the first six months of 2016.
Guidance
Buoyed by strong second-quarter results, Equifax raised its guidance for the full year. The company now expects revenues between $3.13 billion and $3.16 billion (midpoint: $3.145 billion), compared to its earlier projection of $3.05–$3.15 billion (midpoint: $3.10 billion). The revenue outlook at the midpoint is above the Zacks Consensus Estimate of $3.12 billion.
Adjusted earnings per share are now forecasted to be between $5.35 and $5.40 (midpoint: $5.375), compared to the previous projection of $5.15–$5.25 (midpoint: $5.20). The earnings guidance at the midpoint is above the Zacks Consensus Estimate of $5.24.
Coming to the third-quarter outlook, Equifax projects revenues in the range of $795 million to $805 million (midpoint: $800 million), while the Zacks Consensus Estimate is $793.31 million. Adjusted earnings per share are projected to be between $1.33 and $1.36 (midpoint: $1.345). The Zacks Consensus Estimate is pegged lower at $1.32.
Our Take
Equifax posted better-than-expected results for the first quarter, which also registered year-over–year growth. Moreover, the company issued an encouraging outlook for the third quarter, wherein both the revenue and earnings guidance were above the respective Zacks Consensus Estimate at the midpoint. Furthermore, upbeat full-year guidance for both revenues and earnings indicates that that its growth initiatives aimed in the right direction.
Management’s efforts, such as strategic initiatives for product innovation, expansion of data assets through acquisitions and continuous share gains in North America, should provide tailwinds. Also, the company’s strong correlation with the consumer and financial markets as well as exposure in the U.S. and Europe are likely to propel growth, going ahead.
However, competition from the likes of Automatic Data Processing Inc. (ADP - Free Report) , Fiserv Inc. and Moody’s Corp. (MCO - Free Report) , along with uncertainty in the mortgage sector, raises concerns.
EQUIFAX INC Price, Consensus and EPS Surprise
EQUIFAX INC Price, Consensus and EPS Surprise | EQUIFAX INC Quote
Currently, Equifax has a Zacks Rank #3 (Hold).
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