Equifax Inc. (EFX - Free Report) reported lower-than-expected results in the third quarter of 2018.
Adjusted earnings of $1.41 per share missed the Zacks Consensus Estimate by a penny and declined 7.8% on a year-over-year basis. The reported figure came in at the lower end of the guided range of $1.39-$1.44 per share. Costs associated with the cybersecurity incident and buyout-related amortization expenses weighed on the company’s bottom line.
Revenues totaled $834.2 million, which fell short of the consensus estimate by $23 million and decreased slightly year over year. The top-line figure also came in below the guided range of $853-$863 million. Weakness across International and Global Consumer Solutions resulted in the year-over-year revenue decline. This was partially offset by strength in Workforce Solutions and USIS segments.
Following the quarterly results, shares of Equifax decreased 9.9% in after-hours trading. In a year’s time, the stock has declined 6.9% compared to the 17.7% rally of the industry it belongs to.
Let’s check out the numbers in detail.
Segmental Revenues
Revenues from the USIS division grossed $308.3 million, up slightly from the year-ago quarter number. Within the division, both Online Information Solutions revenues ($222.4 million) and Mortgage Solutions revenues ($39 million) grew 1% year over year. Meanwhile, Financial Marketing Services revenues ($46.9 million) declined 2%. USIS accounted for 37% of total revenues.
Revenues from the International division totaled $235 million, down 2% year over year on a reported basis but up 5% on a constant-currency basis. On the international front, Equifax registered year-over-year revenue decline of 1%, 1% and 11% in Asia-Pacific, Europe and Latin, respectively. On a local-currency basis, revenues from both Asia-Pacific and Latin America grew 7% each, while that from Europe remained flat year over year. Revenues from Canada rose 6% year over year on a reported basis and 11% on a local-currency basis. International accounted for 28% of total revenues.
Revenues from the Workforce Solutions segment came in at $202.2 million, up 9% from the year-ago quarter figure. This improvement includes Verification Services revenues of $143.9 million (up 11% year over year) and Employer Services revenues of $58.3 million (up 3% year over year). Workforce Solutions contributed to 24% of total revenues.
Revenues from Global Consumer Solutions segment amounted to $88.7 million, down 12% year over year on a reported as well as local-currency basis. The segment contributed to 11% of total revenues.
Equifax, Inc. Revenue (TTM)
Operating Results
Adjusted EBITDA in third-quarter decreased 12% year over year to $275.5 million. Adjusted EBITDA margin was 33% compared with 37.4% in the year-ago quarter.
Adjusted EBITDA margin for USIS was 46.2% compared with 49.2% in the year-ago quarter. Adjusted EBITDA margin for the International segment was 29.4% in third quarter compared with 33.2% in the prior-year quarter. Workforce Solutions’ adjusted EBITDA margin was 47.5% compared with 48.6% in the third quarter of 2017. Adjusted EBITDA margin for Global Consumer Solutions was 28.3% compared with 29.9% in the year-ago quarter.
Balance Sheet and Cash Flow
Equifax exited third-quarter with cash and cash equivalents of $253.4 million, lower than $327.4 million in the prior quarter. Long-term debt at the end of the quarter was $2.6 billion flat with the prior-quarter number. The company generated $152.6 million of cash from operating activities and spent $89.4 million in capital expenditures. Also, Equifaxpaid dividend of $46.9 million to its shareholders in the quarter.
Guidance
For the fourth quarter of 2018, Equifax expects revenues in the range of $835-$850 million, reflecting a year-over-year local currency growth of 2-4%. The guided range is much below the Zacks Consensus Estimate of $867.1 million. Adjusted EPS is anticipated to be between $1.30 and $1.35, far below the Zacks Consensus Estimate of $1.43.
For 2018, revenues are expected between $3.412 billion and $3.427 billion, below the Zacks Consensus Estimate of $3.47 billion. Adjusted EPS is anticipated to be between $5.70 and $5.75, below the Zacks Consensus Estimate of $5.84.
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 earnings reports of key players like Booz Allen Hamilton Holding (BAH - Free Report) , Waste Connections (WCN - Free Report) and First Data . Booz Allen Hamilton will report second-quarter fiscal 2019 results on Oct 29, Waste Connections and First Data will release third-quarter 2018 results on the same day.
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Equifax Inc. (EFX - Free Report) reported lower-than-expected results in the third quarter of 2018.
Adjusted earnings of $1.41 per share missed the Zacks Consensus Estimate by a penny and declined 7.8% on a year-over-year basis. The reported figure came in at the lower end of the guided range of $1.39-$1.44 per share. Costs associated with the cybersecurity incident and buyout-related amortization expenses weighed on the company’s bottom line.
Revenues totaled $834.2 million, which fell short of the consensus estimate by $23 million and decreased slightly year over year. The top-line figure also came in below the guided range of $853-$863 million. Weakness across International and Global Consumer Solutions resulted in the year-over-year revenue decline. This was partially offset by strength in Workforce Solutions and USIS segments.
Following the quarterly results, shares of Equifax decreased 9.9% in after-hours trading. In a year’s time, the stock has declined 6.9% compared to the 17.7% rally of the industry it belongs to.
Let’s check out the numbers in detail.
Segmental Revenues
Revenues from the USIS division grossed $308.3 million, up slightly from the year-ago quarter number. Within the division, both Online Information Solutions revenues ($222.4 million) and Mortgage Solutions revenues ($39 million) grew 1% year over year. Meanwhile, Financial Marketing Services revenues ($46.9 million) declined 2%. USIS accounted for 37% of total revenues.
Revenues from the International division totaled $235 million, down 2% year over year on a reported basis but up 5% on a constant-currency basis. On the international front, Equifax registered year-over-year revenue decline of 1%, 1% and 11% in Asia-Pacific, Europe and Latin, respectively. On a local-currency basis, revenues from both Asia-Pacific and Latin America grew 7% each, while that from Europe remained flat year over year. Revenues from Canada rose 6% year over year on a reported basis and 11% on a local-currency basis. International accounted for 28% of total revenues.
Revenues from the Workforce Solutions segment came in at $202.2 million, up 9% from the year-ago quarter figure. This improvement includes Verification Services revenues of $143.9 million (up 11% year over year) and Employer Services revenues of $58.3 million (up 3% year over year). Workforce Solutions contributed to 24% of total revenues.
Revenues from Global Consumer Solutions segment amounted to $88.7 million, down 12% year over year on a reported as well as local-currency basis. The segment contributed to 11% of total revenues.
Equifax, Inc. Revenue (TTM)
Operating Results
Adjusted EBITDA in third-quarter decreased 12% year over year to $275.5 million. Adjusted EBITDA margin was 33% compared with 37.4% in the year-ago quarter.
Adjusted EBITDA margin for USIS was 46.2% compared with 49.2% in the year-ago quarter. Adjusted EBITDA margin for the International segment was 29.4% in third quarter compared with 33.2% in the prior-year quarter. Workforce Solutions’ adjusted EBITDA margin was 47.5% compared with 48.6% in the third quarter of 2017. Adjusted EBITDA margin for Global Consumer Solutions was 28.3% compared with 29.9% in the year-ago quarter.
Balance Sheet and Cash Flow
Equifax exited third-quarter with cash and cash equivalents of $253.4 million, lower than $327.4 million in the prior quarter. Long-term debt at the end of the quarter was $2.6 billion flat with the prior-quarter number. The company generated $152.6 million of cash from operating activities and spent $89.4 million in capital expenditures. Also, Equifaxpaid dividend of $46.9 million to its shareholders in the quarter.
Guidance
For the fourth quarter of 2018, Equifax expects revenues in the range of $835-$850 million, reflecting a year-over-year local currency growth of 2-4%. The guided range is much below the Zacks Consensus Estimate of $867.1 million. Adjusted EPS is anticipated to be between $1.30 and $1.35, far below the Zacks Consensus Estimate of $1.43.
For 2018, revenues are expected between $3.412 billion and $3.427 billion, below the Zacks Consensus Estimate of $3.47 billion. Adjusted EPS is anticipated to be between $5.70 and $5.75, below the Zacks Consensus Estimate of $5.84.
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 earnings reports of key players like Booz Allen Hamilton Holding (BAH - Free Report) , Waste Connections (WCN - Free Report) and First Data . Booz Allen Hamilton will report second-quarter fiscal 2019 results on Oct 29, Waste Connections and First Data will release third-quarter 2018 results on the same day.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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