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Equifax (EFX) Beats on Q3 Earnings & Revenues, Ups '21 View

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Equifax Inc. (EFX - Free Report) reported better-than-expected third-quarter 2021 results.

Adjusted earnings of $1.85 per share beat the Zacks Consensus Estimate by 7.6% but declined on a year-over-year basis. The reported figure exceeded the guided range of $1.62-$1.72. 

Revenues of $1.22 billion outpaced the consensus estimate by 3.6% and improved 14.5% year over year on a reported basis and 14% on a local-currency basis. The reported figure exceeded the guided range of $1.16-$1.18 billion.

The company reported its seventh consecutive quarter of solid double-digit revenue growth. The uptick was driven by strength across the company’s Workforce Solutions, U.S. Information Solutions (“USIS”) non-mortgage market and International revenues. The company has been executing its EFX2023 strategy, leveraging the EFX Cloud to drive new products, innovation and growth.  The company has delivered new products leveraging EFX Cloud. It also carried out strategic acquisitions of Appriss Insights, Health e(fx) and Teletrack, which boost differentiated data, drive the company’s Workforce Solutions and widen its ID & Fraud capabilities.

So far this year, shares of Equifax have gained 39.9%, outperforming the 13.3% decline of the industry it belongs to and 21.6% growth of the Zacks S&P 500 composite.

Zacks Investment ResearchImage Source: Zacks Investment Research

Let’s check out the numbers in detail.

Segmental Revenues

Revenues in the USIS division came in at $387.8 million, up 0.4% from the year-ago quarter. Within the division, Online Information Solutions’ revenues of $286.3 million were up 1% year over year. Mortgage Solutions’ revenues of $46.2 million declined 17% year over year. Financial Marketing Services’ revenues came in at $55.3 million, up 20% year over year.

Revenues in the International division totaled $245.4 million, up 13% year over year on a reported basis and 10% on a local-currency basis. Asia Pacific revenues of $88.7 million grew 11% year over year on a reported basis and 7% on a local-currency basis. Revenues from Europe came in at $67.7 million, up 15% year over year on a reported basis and 9% on a local-currency basis. Latin America revenues of $44.6 million grew 11% year over year on a reported basis and 16% on a local-currency basis. Canada revenues of $44.4 million improved 15% year over year on a reported basis and 8% on a local-currency basis.

Revenues in the Workforce Solutions segment totaled $508 million, up 35% from the year-ago quarter’s figure. Within the segment, Verification Services’ revenues of $402.7 million were up 34% year over year. Employer Services revenues of $105.3 million grew 39% year over year.

Revenues in the Global Consumer Solutions segment amounted to $81.7 million, down 6% year over year on a reported basis and 7% on a local-currency basis.

Operating Results

Adjusted EBITDA in the third quarter of 2021 came in at $403.9 million, up 1.8% from the year-ago quarter. Adjusted EBITDA margin fell to 33% from 37.1% in the year-ago quarter.

Adjusted EBITDA margin for USIS was 40.1% compared with 46% in the year-ago quarter. Adjusted EBITDA margin for the International segment was 26.7% compared with 32.4% in the prior-year quarter. Workforce Solutions’ adjusted EBITDA margin was 54.3% compared with 57.8% a year ago. Adjusted EBITDA margin for Global Consumer Solutions was 23.4% compared with 24.8% in the year-ago quarter.

Equifax, Inc. Price, Consensus and EPS Surprise

Equifax, Inc. Price, Consensus and EPS Surprise

Equifax, Inc. price-consensus-eps-surprise-chart | Equifax, Inc. Quote

Balance Sheet and Cash Flow

Equifax exited third-quarter 2021 with cash and cash equivalents of $2.03 billion compared with $458.1 million at the end of the prior quarter. Long-term debt was $4.96 billion compared with $3.28 billionat the end of the prior quarter.

The company generated $398.4 million of cash from operating activities and capex was $97.4 million. Also, Equifax paid out dividends of $47.6 million to shareholders in the reported quarter.

Fourth-Quarter and Full-Year 2021 Guidance

For the fourth quarter of 2021, Equifax expects revenues between $1.23 and $1.25 billion. The Zacks Consensus Estimate of $1.19 billion lies below the guidance.

Adjusted EPS is anticipated in the range of $1.72-$1.82. The Zacks Consensus Estimate of $1.79 lies within the guidance.

For full-year 2021, revenues are now expected between $4.901 and $4.921 billion compared with the prior guidance of $4.76-$4.80 billion. The Zacks Consensus Estimate of $4.82 billion lies below the updated guidance.

Adjusted EPS is now anticipated in the range of $7.52-$7.62 compared with the prior guidance of $7.25-$7.45. The Zacks Consensus Estimate of $7.46 lies below the updated guidance.

Currently, Equifax carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Investors interested in the broader Zacks Business Services sector are awaiting third-quarter 2021 earnings reports of key players like Fiserv (FISV - Free Report) , Automatic Data Processing (ADP - Free Report) and Republic Services (RSG - Free Report) . While Fiserv and Automatic Data Processing are slated to report third-quarter earnings on Oct 27, Republic Services is scheduled to release the same on Oct 28.