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Equifax (EFX) Q2 Earnings Surpass Estimates, Revenues Lag
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Equifax Inc. (EFX - Free Report) reported mixed second-quarter 2018 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
Adjusted earnings of $1.56 per share outpaced the consensus mark by 2 cents but declined 2.5% year over year. The bottom-line figure came in at the higher end of the guided range of $1.51-$1.56 per share. Costs associated with the cybersecurity incident and buyout-related amortization expenses resulted in the earnings decline, offset by the new tax (Tax Cuts and Jobs Act) law benefits. The company enjoyed a tax benefit of $1.9 million in the quarter.
Revenues came in at $876.9 million, which missed the consensus estimate by $9 million but increased 2.4% year over year. The reported figure was below the guided range of $880-$890 million. Strength across the International and Workforce Solutions segments contributed toward year-over-year revenue growth. These were, however, partially offset by Equifax’s soft business at the U.S. Information Solutions (USIS) and Global Consumer Solutions segments.
Shares were down 2.1% in in afterhours trading as the company provided a weak earnings guidance, the mid-point of which marks a significant year-over-year decline. In a year’s time, shares of Equifax have declined 10.5% against the 38.8% rally of the industry it belongs to.
Let’s check out the numbers in detail.
Revenues by Segment
Revenues from the USIS division amounted to $324.6 million, down 2% from the year-ago quarter. The division suffered revenues decline of 4% at Online Information Solutions ($219.7 million) and 9% at Financial Marketing Services ($45.5 million) sub-segments, while sales at Mortgage Solutions grew 18% to $41.7 million. USIS accounted for 37% of total revenues.
Revenues from the International division totaled $250.3 million, up 8% year over year on a reported as well as constant-currency basis. On the international front, Equifax registered revenue growth of 12%, 6%, 2% and 13% in Asia-Pacific, Europe, Latin America and Canada, respectively. On a local-currency basis, revenues from Asia-Pacific, Europe, Latin America and Canada grew 12%, 1%, 15% and 8%, respectively. International accounted for 28% of total revenues.
Revenues from the Workforce Solutions segment summed $207.6 million, up 7% from the year-ago quarter. This improvement includes Verification Services revenues of $149.3 million (up 15% year over year) and Employer Services revenues of $58.3 million (down 9% year over year). Workforce Solutions contributed to 24% of total revenues.
Revenues from Global Consumer Solutions segment came in at $94.4 million, down 5% year over year on a reported as well as local-currency basis. It contributed to 11% of total revenues.
Adjusted EBITDA in second-quarter 2018 decreased 8% year over year to $306.9 million. Adjusted EBITDA margin was 35% compared with 39.1% in the year-ago quarter.
Adjusted EBITDA margin for USIS was 47.7% compared with 51.5% in the year-ago quarter. Adjusted EBITDA margin for International was 30.5% in second quarter compared with 30.9% in the year-ago quarter. Workforce Solutions’ adjusted EBITDA margin was 47.6% compared with 51.2% in the prior-year quarter. Adjusted EBITDA margin for Global Consumer Solutions was 31% flat with the year-ago tally.
Balance Sheet and Cash Flow
Equifax exited second-quarter with cash and cash equivalents of $327.4 million, higher than $249.3 million in the prior quarter. Long-term debt at the end of the quarter was $2.6 billion compared with $1.7 billion in the prior quarter. The company generated $235.2 million of cash from operating activities and spent $62.5 million in capital expenditures. Also, Equifaxpaid dividend of $47 million to its shareholders in the quarter.
Guidance
For the third quarter of 2018, Equifax expect revenues to be in the range of $853-$863 million, reflecting year-over-year constant-currency growth of 4-5%. The guided range is much below the Zacks Consensus Estimate of $870.9 million. Adjusted EPS is anticipated to be between $1.39 and $1.44. This projected range is also far below the Zacks Consensus Estimate of $1.54.
For 2018, revenues are expected to be between $3.425 billion and $3.525 billion, the mid-point of which is slightly below the Zacks Consensus Estimate of $3.50 billion. Adjusted EPS is anticipated to be between $5.80 and $6.00. Mid-point of this guided range is also slightly below the Zacks Consensus Estimate of $5.94.
Investors interested in the broader Business Services sector are keenly awaiting second-quarter earnings reports from key players like Verisk Analytics (VRSK - Free Report) , Aptiv (APTV - Free Report) and Fiserv . All the companies are slated to report their quarterly numbers on Jul 31.
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Equifax (EFX) Q2 Earnings Surpass Estimates, Revenues Lag
Equifax Inc. (EFX - Free Report) reported mixed second-quarter 2018 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
Adjusted earnings of $1.56 per share outpaced the consensus mark by 2 cents but declined 2.5% year over year. The bottom-line figure came in at the higher end of the guided range of $1.51-$1.56 per share. Costs associated with the cybersecurity incident and buyout-related amortization expenses resulted in the earnings decline, offset by the new tax (Tax Cuts and Jobs Act) law benefits. The company enjoyed a tax benefit of $1.9 million in the quarter.
Revenues came in at $876.9 million, which missed the consensus estimate by $9 million but increased 2.4% year over year. The reported figure was below the guided range of $880-$890 million. Strength across the International and Workforce Solutions segments contributed toward year-over-year revenue growth. These were, however, partially offset by Equifax’s soft business at the U.S. Information Solutions (USIS) and Global Consumer Solutions segments.
Shares were down 2.1% in in afterhours trading as the company provided a weak earnings guidance, the mid-point of which marks a significant year-over-year decline. In a year’s time, shares of Equifax have declined 10.5% against the 38.8% rally of the industry it belongs to.
Let’s check out the numbers in detail.
Revenues by Segment
Revenues from the USIS division amounted to $324.6 million, down 2% from the year-ago quarter. The division suffered revenues decline of 4% at Online Information Solutions ($219.7 million) and 9% at Financial Marketing Services ($45.5 million) sub-segments, while sales at Mortgage Solutions grew 18% to $41.7 million. USIS accounted for 37% of total revenues.
Revenues from the International division totaled $250.3 million, up 8% year over year on a reported as well as constant-currency basis. On the international front, Equifax registered revenue growth of 12%, 6%, 2% and 13% in Asia-Pacific, Europe, Latin America and Canada, respectively. On a local-currency basis, revenues from Asia-Pacific, Europe, Latin America and Canada grew 12%, 1%, 15% and 8%, respectively. International accounted for 28% of total revenues.
Revenues from the Workforce Solutions segment summed $207.6 million, up 7% from the year-ago quarter. This improvement includes Verification Services revenues of $149.3 million (up 15% year over year) and Employer Services revenues of $58.3 million (down 9% year over year). Workforce Solutions contributed to 24% of total revenues.
Revenues from Global Consumer Solutions segment came in at $94.4 million, down 5% year over year on a reported as well as local-currency basis. It contributed to 11% of total revenues.
Equifax, Inc. Revenue (TTM)
Equifax, Inc. Revenue (TTM) | Equifax, Inc. Quote
Operating Results
Adjusted EBITDA in second-quarter 2018 decreased 8% year over year to $306.9 million. Adjusted EBITDA margin was 35% compared with 39.1% in the year-ago quarter.
Adjusted EBITDA margin for USIS was 47.7% compared with 51.5% in the year-ago quarter. Adjusted EBITDA margin for International was 30.5% in second quarter compared with 30.9% in the year-ago quarter. Workforce Solutions’ adjusted EBITDA margin was 47.6% compared with 51.2% in the prior-year quarter. Adjusted EBITDA margin for Global Consumer Solutions was 31% flat with the year-ago tally.
Balance Sheet and Cash Flow
Equifax exited second-quarter with cash and cash equivalents of $327.4 million, higher than $249.3 million in the prior quarter. Long-term debt at the end of the quarter was $2.6 billion compared with $1.7 billion in the prior quarter. The company generated $235.2 million of cash from operating activities and spent $62.5 million in capital expenditures. Also, Equifaxpaid dividend of $47 million to its shareholders in the quarter.
Guidance
For the third quarter of 2018, Equifax expect revenues to be in the range of $853-$863 million, reflecting year-over-year constant-currency growth of 4-5%. The guided range is much below the Zacks Consensus Estimate of $870.9 million. Adjusted EPS is anticipated to be between $1.39 and $1.44. This projected range is also far below the Zacks Consensus Estimate of $1.54.
For 2018, revenues are expected to be between $3.425 billion and $3.525 billion, the mid-point of which is slightly below the Zacks Consensus Estimate of $3.50 billion. Adjusted EPS is anticipated to be between $5.80 and $6.00. Mid-point of this guided range is also slightly below the Zacks Consensus Estimate of $5.94.
Zacks Rank & Upcoming Releases
Equifax currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the broader Business Services sector are keenly awaiting second-quarter earnings reports from key players like Verisk Analytics (VRSK - Free Report) , Aptiv (APTV - Free Report) and Fiserv . All the companies are slated to report their quarterly numbers on Jul 31.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>