As used herein, the terms Equifax, the Company, we, our and us refer to Equifax
Inc., a Georgia corporation, and its consolidated subsidiaries as a combined
entity, except where it is clear that the terms mean only Equifax Inc.
All references to earnings per share data in Management's Discussion and
Analysis, or MD&A, are to diluted earnings per share, or EPS, unless otherwise
noted. Diluted EPS is calculated to reflect the potential dilution that would
occur if stock options or other contracts to issue common stock were exercised
and resulted in additional common shares outstanding.
We are a leading global provider of information solutions, employment and income
verifications and human resources business process outsourcing services. We
leverage some of the largest sources of consumer and commercial data, along with
advanced analytics and proprietary technology, to create customized insights
which enable our business customers to grow faster, more efficiently and more
profitably, and to inform and empower consumers.
Businesses rely on us for consumer and business credit intelligence, credit
portfolio management, fraud detection, decisioning technology, marketing tools,
and human resources-related services. We also offer a portfolio of products that
enable individual consumers to manage their financial affairs and protect their
identity. Our revenue stream is diversified among businesses across a wide range
of industries, international geographies and individual consumers.
On February 24, 2016, we completed the acquisition of Veda for cash
consideration of approximately $1.7 billion (2.4 billion Australian dollars) and
debt assumed of approximately $189.5 million (261.9 million Australian dollars).
We financed the cash portion of the purchase price through a combination of new
debt, including the Term Loan, the 364-Day Revolver, and commercial paper. Refer
to Note 5 for further information on debt.
Segment and Geographic Information
Segments. The USIS segment, the largest of our four segments, consists of
three product and service lines: Online Information Solutions; Mortgage
Solutions; and Financial Marketing Services. Online Information Solutions and
Mortgage Solutions revenue is principally transaction-based and is derived from
our sales of products such as consumer and commercial credit reporting and
scoring, identity management, fraud detection and modeling services. USIS also
markets certain decisioning software services, which facilitate and automate a
variety of consumer and commercial credit-oriented decisions. Financial
Marketing Services revenue is principally project and subscription based and is
derived from our sales of batch credit and consumer wealth information such as
those that assist clients in acquiring new customers, cross selling to existing
customers and managing portfolio risk.
The International segment consists of Canada, Europe, Asia Pacific and Latin
America. Following the acquisition of Veda, we have created an Asia Pacific
reporting unit which consists mainly of our Australia and New Zealand
operations. Canada's products and services are similar to our USIS offerings,
while Europe, Asia Pacific and Latin America are made up of varying mixes of
product lines that are in our USIS reportable segment. In Europe, Asia Pacific
and Latin America, we also provide information and technology services to
support lenders and other creditors in the collections and recovery management
The Workforce Solutions segment consists of the Verification Services and
Employer Services business lines. Verification Services revenue is
transaction-based and is derived primarily from employment and income
verification. Employer Services revenues are derived from our provision of
certain human resources business process outsourcing services that include both
transaction and subscription based product offerings. These services include
unemployment claims management, employment-based tax credit services and other
complementary employment-based transaction services.
Global Consumer Solutions revenue is both transaction and subscription based and
is derived from the sale of credit monitoring and identity theft protection
products, which we deliver electronically to consumers primarily via the
internet in the U.S., Canada, and the U.K. We reach consumers directly and
indirectly through partners. We also sell consumer and credit information to
resellers who combine our information with other information to provide direct
to consumer monitoring, reports and scores.
Geographic Information. We currently have significant operations in the
following countries: Argentina, Australia, Canada, Chile, Costa Rica, Ecuador,
El Salvador, Honduras, India, Mexico, New Zealand, Paraguay, Peru, Portugal, the
Republic of Ireland, Spain, the U.K., Uruguay and the U.S. Our operations in the
Republic of Ireland focus on data handling and customer support activities. We
also offer consumer credit services in India, Singapore, Cambodia, Malaysia,
Saudi Arabia, and Russia through joint ventures and have an investment in a
consumer and commercial credit information company in Brazil.
Key Performance Indicators. Management focuses on a variety of key indicators
to monitor operating and financial performance. These performance indicators
include operating revenue, change in operating revenue, operating income,
operating margin, net income attributable to Equifax, diluted earnings per
share, cash provided by operating activities and capital expenditures. The key
performance indicators for the three months ended March 31, 2016 and 2015 were
Key Performance Indicators
Three Months Ended
(In millions, except per share data)
Operating revenue $ 728.3 $ 651.8
Operating revenue change 12 % 12 %
Operating income $ 176.2 $ 154.2
Operating margin 24.2 % 23.7 %
Net income attributable to Equifax $ 102.1 $ 88.3
Diluted earnings per share from continuing operations $ 0.85 $
Cash provided by operating activities $ 90.3 $ 102.9
Capital expenditures $ 40.2 $ 21.6
Operational and Financial Highlights
• We did not repurchase shares of our common stock during the first three
months of 2016. At March 31, 2016, $667.2 million was available for future
purchases of common stock under our share repurchase authorization.
• We paid out $39.2 million or $0.33 per share in dividends to our
shareholders during the first three months of 2016.
Business Environment and Company Outlook
Demand for our services tends to be correlated to general levels of economic
activity and to consumer credit activity, both enhanced by our own initiatives
to expand our products and markets served, and to small commercial credit and
marketing activity. In 2016, in the United States, we expect modest growth in
overall economic activity and consumer credit for the remainder of the year.
Mortgage market origination activity is expected to be flat to slightly down for
the rest of the year. Internationally, the environment continues to be
challenging as various countries address their particular political, fiscal and
economic issues. In addition, current foreign exchange rates, compared to the
prior year, will negatively impact growth in revenue and profit when reported in
Over the long term, we expect that our ongoing investments in new product
innovation, business execution, enterprise growth initiatives, technology
infrastructure, and continuous process improvement will enable us to deliver
long-term average organic revenue growth ranging between 6% and 8% with
additional growth of 1% to 2% derived from strategic acquisitions consistent
with our long term business strategy. We also expect to grow earnings per share
at a somewhat faster rate than revenue over time as a result of both operating
and financial leverage.
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