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Equifax (EFX) Beats Q3 Earnings Estimates, Cuts '19 EPS View

Zacks Equity Research

Equifax Inc. EFX reported solid third-quarter 2019 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings of $1.48 per share beat the consensus mark by 4 cents and improved 4.9% on a year-over-year basis. The reported figure exceeded the guided range of $1.41-$1.46.

Revenues of $875.7 million outpaced the consensus estimate by $2.5 million and improved 5% year over year on a reported basis and 7% on a local currency basis. The reported figure came within the guided range of $865-$880 million.

During the reported quarter, Equifax entered into a partnership with Urjanet while continuing to progress well in its multi-year $1.25 billion EFX 2020 cloud technology and security transformation program.

So far this year, shares of Equifax have gained 49.7% compared with 32.3% rise of the industry it belongs to and 18.3% increase of the Zacks S&P 500 composite.

 

Let’s check out the numbers in detail.

Segmental Revenues

Revenues in the USIS division came in at $315.5 million, up 2% from the year-ago quarter’s number. Within the division, Online Information Solutions revenues of $233 million were up 5% year over year. Mortgage Solutions revenues of $36.7 million declined 6% year over year. Financial Marketing Services revenues came in at $45.8 million, down 2% year over year. The segment contributed 36% to total revenues.

Revenues in the International division totaled $230.5 million, down 2% year over year on a reported but up 5% on a local currency basis. Asia Pacific revenues of $77.4 million declined 4% year over year on a reported basis but grew 2% on a local currency basis. Revenues from Europe came in at $64.8 million, which fell 5% year over year on a reported basis and slightlyon a local currency basis. Latin America revenues of $49.2 million improved 1% year over year on a reported basis and 15% on a local currency basis. Canada revenues of $39.1 million rose 5% year over year on a reported basis and 6% on a local currency basis. The International segment contributed 26% to total revenues.

Revenues in the Workforce Solutions segment totaled $240.6 million, up 19% from the year-ago quarter figure. Within the segment, Verification Services revenues of $185.3 million were up 19% year over year. Employer Services revenues of $55.3 million were down 5% year over year. Workforce Solutions contributed 28% to total revenues.

Revenues in the Global Consumer Solutions segment amounted to $89.1 million, up 1% year over year on a reported basis and local currency basis. The segment contributed 10% to total revenues.

Equifax, Inc. Revenue (TTM)

 

Equifax, Inc. Revenue (TTM)

Equifax, Inc. revenue-ttm | Equifax, Inc. Quote

Operating Results

Adjusted EBITDA in third-quarter 2019 improved 10% year over year to $304.1 million. Adjusted EBITDA margin rose to 33.9% from 33% 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

Adjusted EBITDA margin for USIS was 44.4% compared with 46.2% in the year-ago quarter. Adjusted EBITDA margin for the International segment was 30.9% compared with 29.4% in the prior-year quarter. Workforce Solutions’ adjusted EBITDA margin was 48.8% compared with 47.5% a year ago. Adjusted EBITDA margin for Global Consumer Solutions was 24.9% compared with 28.3% in the year-ago quarter.

Balance Sheet and Cash Flow

Equifax exited third-quarter 2019 with cash and cash equivalents of $167.5 million compared with $135.8 million at the end of the prior quarter. Long-term debt of $2.83 billion was flat with the prior quarter.

The company used $164.9 million of cash in operating activities and capex was $97.2 million. Also, Equifax paid out dividend of $47.2 million to shareholders in the reported quarter.

Q4 Guidance

For the fourth quarter of 2019, Equifax expects revenues in the range of $885-$900 million, indicating year-over-year local currency growth of 7.5-9.5%. The current Zacks Consensus Estimate of $884 million lies below the guided range.

Adjusted EPS is anticipated between $1.47 and $1.52 (including a negative foreign exchange impact of 2 cents).The current Zacks Consensus Estimate of $1.55 is above the guided range.

2019 Guidance

Equifax updated its full-year 2019 guidance for revenues while lowering the same for earnings.

For 2019, revenues are now expected between $3.507 and $3.522 billion compared with the previously guided range of $3.425-$3.525 billion. The current guidance indicates year-over-year local currency growth of 5% and 2% negative impact from foreign exchange movement. The current Zacks Consensus Estimate of $3.48 billion lies below the guided range.

Adjusted EPS is now anticipated between $5.55 per share and $5.60 per share compared with the previously guided range of $5.57-$5.77. The current guidance includes 15 cents of negative impact of foreign exchange movement. The current Zacks Consensus Estimate of $5.59 lies within the guided range.

Zacks Rank & Upcoming Releases

Currently, Equifax carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Zacks Business Services sector are awaiting third-quarter 2019 earnings of key players like Clean Harbors CLH, Aptiv APTV and Republic Services RSG, each scheduled to release results on Oct 30.

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