Yesterday, Equifax Inc. EFX reported better-than-expected first-quarter 2015 results wherein both the top line and the bottom line came ahead of the respective Zacks Consensus Estimate and improved year over year. The company’s adjusted earnings per share from continuing operations of $1.07 surpassed the Zacks Consensus Estimate of $1.02. Also, earnings were up 20.2% from the year-ago quarter.
Quarter Details
Equifax’s revenues of $658.1 million were up 11.5% year over year and beat the Zacks Consensus Estimate of $636 million. The year-over-year upside was supported by revenue growth across all its business segments, except International.
Segment-wise, total U.S. Information Solutions (USIS) revenues were up 14% from the year-ago quarter to $298.7 million. Among sub-segments, revenue growth was recorded in the Online Information Solutions (up 15%), Mortgage Solutions Services (up 28%) and Financial Marketing Services (up 3%).
International revenues (including Europe, Canada and Latin America) were down marginally by 1% year over year to $138.8 million. Latin America and Europe witnessed revenue growth of 2% and 1%, respectively, which was more than offset by 9% decline in Canada.
Revenues from the Workforce Solutions segment improved 24% year over year to $148.7 million, primarily on 34% and 13% increase in revenues from Verification Services and Employer Services, respectively.
Personal Solutions contributed $65.6 million to revenues, reflecting a 4% year-over-year improvement.
Equifax’s adjusted operating margins came in at 27.7% compared with 30.6% in the year-ago quarter. Selling, general and administrative expenses also increased 32.8% year over year to $232.9 million.
Adjusted net income came in at $129.7 million or $1.07 per share compared with $110.9 million or 89 cents a share in the year-ago quarter.
Equifax exited the quarter with $95 million in cash and cash equivalents, compared with $128.3 million at the end of fourth-quarter 2014. Total long-term debt (including current portion) was $1.52 billion. During the first quarter, Equifax generated a cash flow of $102.9 million from operational activities.
During the quarter, the company paid dividends of $34.7 million and repurchased stocks worth $89.9 million.
Guidance
Concurrent with its first-quarter earnings release, the company issued the second-quarter and full-year 2015 guidance. Management expects revenues in the second quarter to range between $655 million and $665 million (mid-point $660 million), while the Zacks Consensus Estimate is pegged at $650 million. Adjusted earnings per share are forecasted between $1.09 and $1.11 (mid-point $1.10). Meanwhile, the Zacks Consensus Estimate is $1.09.
For full-year 2015, the company forecasts revenues in the range of $2.585 to $2.635 billion (mid-point $2.61 billion). The Zacks Consensus Estimate is pegged at $2.582 billion. Adjusted earnings per share are forecasted between $4.28 and $4.35 (mid-point $4.32). Meanwhile, the Zacks Consensus Estimate is pegged at $4.26.
Our Take
Equifax reported better-than-expected first-quarter 2015 results wherein the top line and the bottom line came ahead of the Zacks Consensus Estimate and improved year over year. The company also provided encouraging second-quarter and full-year 2015 guidance.
Management’s efforts such as strategic initiatives for product innovation, expansion of data assets through acquisitions and continuous share gains in North America raise optimism.
Also, the company’s strong correlation with the consumer and financial markets as well as its 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, Fiserv Inc. FISV, Moody’s Corp. MCO and uncertainty in the mortgage sector raise concern.
Currently, Equifax has a Zacks Rank #3 (Hold).
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