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Equifax Inc. (EFX - Free Report) reported fourth-quarter 2013 adjusted earnings per share from continuing operations of 91 cents, in line with the Zacks Consensus Estimate. Earnings were up 19.7% from the year-ago quarter.

Quarter Details

Equifax reported revenues of $578.5 million from continuing operations which increased 8% year over year but lagged the Zacks Consensus Estimate of $581 million. Revenues on adjusted basis (excluding the impact of the collection of certain reserved billion for 2012) came in at $571.3, up 7% year over year. The year-over-year revenue increase resulted from revenue growth in most of its business segments.

Segment-wise, total U.S. Consumer Information Solutions (USCIS) adjusted revenues (excluding the impact of the collection of certain reserved billion for 2012) increased 12% on a year-over-year basis to $248.3 million. Among sub-segments, strong growth was recorded in the Consumer Financial Marketing Services segment (up 20%) and Online Consumer Information Solutions (up 12%), which more than offset the 1.0% revenue decline in the Mortgage Solutions Services.

International revenues (including Europe, Canada and Latin America) grew 6% year over year to $131.5 million, primarily due to 15% growth in the Europe segment, followed by 5.0% growth in the Latin America segment which more than offset the 5% decline in revenues from Canada Consumer segment.

Revenues from the Workforce Solutions segment flat on a year-over-year basis at $112.2 million, primarily due to a 7% decline in revenues from Verification Services which offset a 12% increase in revenues from Employer Services.

North American Personal Solutions contributed $52.5 million to revenues, reflecting a 9% year-over-year improvement. North American Commercial Solutions generated $26.8 million of revenues, down 3% from the year-ago quarter.

Adjusted operating margin (excluding collection of certain reserved billings and a resource realignment charge in 2013, and transaction-related expenses associated with the CSC Credit Services acquisition and the pension settlement in 2012) was 27.3% compared to 25.5% reported in the year-ago quarter. Margin performance was better in the Workforce Solutions segment and North America Personal Solutions which more than offset the margin contractions in USCIS, International and North America Commercial Solutions.

Net income from continuing operations came in at $113.3 million or 91 cents per share compared to $92.6 million or 76 cents reported in the year-ago quarter.

Balance Sheet

Equifax exited the quarter with $235.9 million in cash and cash equivalents, compared to $131.9 million in the previous quarter. Total long-term debt (including current portion) stood at $1.44 billion. Management increased its dividend payment from 22 cents to 25 cents to be paid on Mar 14, 2014.


Considering the recent domestic and international business activities, current foreign exchange rates and the expected slowdown in mortgage activities in the first half of 2014 management expects fiscal 2014 revenues in the range of $2.425 to $2.475 billion. The Zacks Consensus Estimate is pegged at $2.46 billion. The company expects its fiscal 2014 earnings per share to range between $3.75 and $3.89. The Zacks Consensus Estimate is pegged at $3.89.

The company also provided revenue and earnings forecast for the first quarter of 2014. Revenues are expected to range between $575 million and $588 million, lower than the Zacks Consensus Estimate of $595 million. Earnings are forecasted between 84 cents and 88 cents. The Zacks Consensus Estimate is pegged at 88 cents.

Our Take

Equifax reported mixed fourth-quarter results. While Equifax’s bottom line matched the Zacks Consensus Estimate, its top line fell short of the same. Nonetheless, the company’s revenues increased on a year-over-year basis aided by strong growth across most its business segments.

Management’s efforts such as strategic initiatives for product innovation, expansion of data assets through acquisitions and continuous share gains in North America were encouraging.

Given the company’s strong correlation to consumer and financial markets as well as its U.S. and European exposure, we see a gradual improvement in results. Moreover, improving mortgage environment could be a positive for the stock. However, stiff competition from Automatic Data Processing Inc. (ADP - Free Report) , Fiserv Inc. (FISV - Free Report) , Moody’s Corp. (MCO - Free Report) and uncertainty in the mortgage sector are concerns.

Currently, Equifax has a Zacks Rank #2 (Buy).

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