Revenues grew 12.0% year over year to $566.5 million. The upside is attributable to top-line growth across the board.
Segment wise, total U.S. Consumer Information Solutions (:USCIS) revenues were $245.1 million, up 17.0% from the year-ago quarter. Among sub-segments, strong growth was noticed in Mortgage Solutions Services (up 33.0%), followed by the Consumer Financial Marketing Services segment (down 17.0%) and Online Consumer Information Solutions (up 14.0%).
International revenues (including Europe, Canada and Latin America) grew 2.0% year over year to $123.7 million, mostly due to 4.0% growth in the Canada Consumer segment, followed by 3.0% growth in Europe and Latin America remaining flat in dollar terms.
Revenues from the Workforce Solutions segment increased 14.0% year over year to $123.7 million. The upside resulted from a 21.0% year-over-year increase in Verification Services revenues, and a 6.0% increase in Employer Services revenues.
North American Personal Solutions contributed $51.1 million, reflecting 14.0% year-over-year improvement. North American Commercial Solutions generated $22.9 million, up 10.0% from the year-ago quarter.
Gross margin in the first quarter was 65.6%, up 260 basis points from 63.0% reported in the year-ago quarter. Operating margin was 26.3% as against 25.4% a year ago. Margin performance was better in the Workforce solution, North America Personal Solution and North America Commercial Solution segment.
The company reported higher operating expenses with selling, general and administrative expenditure increasing 16.5% year over year.
On a GAAP basis, net income from continuing operations was $82.1 million or 67 cents per share versus $71.1 million or 58 cents per share in the comparable quarter last year. Excluding the impact of CSC Credit Services acquisition fees, pension settlement, certain income tax items and acquisition-related amortization expense, net of tax, adjusted net income was $107.6 million or 87 cents per share, up 27.0% from $85.0 million or 69 cents in the year-ago quarter.
Balance Sheet & Cash Flow
Equifax exited the quarter with $107.6 million in cash and cash equivalents, down from $146.8 million in the previous quarter. Accounts receivables were $310.4, down from $317.0 million in the previous quarter. Total long-term debt was $1.45 billion, remaining flat compared with the prior quarter. Cash provided by operating activities was $66.3 million compared with $144.2 million in the prior quarter.
Considering the recent domestic and international business activities as well as the current foreign exchange rates, the company expects consolidated revenues for the second quarter of 2013 to go up by 12.0%–14.0% compared with the year-ago quarter. Adjusted earnings per share are expected in the range of 88–91 cents, up 23%–27%from the year-ago quarter.
Equifax exited the first quarter of 2013 with decent numbers, in line with the Zacks Consensus Estimate. We are optimistic about Equifax’ revenue growth prospects but turmoil in the financial world keeps us concerned.
Management’s efforts regarding strategic initiatives for product innovation, broadening data assets through acquisitions and continuous share gains in North America were encouraging. Moreover, the international segment of the company is also doing well.
Given the company’s strong correlation with the consumer and financial markets, as well as its U.S. and European exposure, we see a gradual improvement in results. Moreover, improving mortgage environment is a big positive for the stock. However, stiff competition from Fiserv Inc. (FISV), and Green Dot CP - A (GDOT), both with a Zacks Rank #2 (Buy), is a concern.
Currently, Equifax has a Zacks Rank #2 (Buy). One can also consider Symantec Corp. (SYMC), which carries a Zacks Rank #2 (Buy).
More From Zacks.com