Equifax Comfortably Beats 3Q Ests - Analyst Blog
25 Outubro 2012 - 6:20AM
Zacks
Equifax Inc. (EFX)
has posted third quarter 2012 adjusted earnings per share (EPS) of
75 cents, surpassing the Zacks Consensus Estimate by 3 cents.
Results were up 16.0% from the year-ago quarter. The adjusted EPS
excludes the impact of acquisition-related amortization expense,
net of tax. Management attributed the improvement to better
mortgage activities and strong performance of non-mortgage
revenues.
Revenue
Revenue grew 10.9% year over year to $543.9 million. The revenue
figure was at the higher end of the company’s expected growth range
and above the Zacks Consensus Estimate of $540.0 million. The
upside could be attributed to top-line growth across the board,
partially offset by lackluster performance of the International
segment. As per management, the revenue growth reflected solid
payback from investments in new product innovations and penetration
into new markets.
Segment wise, total U.S. Consumer Information Solutions (USCIS)
revenue was $233.3 million, up 15.0% from the year-ago quarter.
Among sub-segments, strong growth was noticed in Mortgage Solutions
Services (up 35.0%), followed by Online Consumer Information
Solutions (up 16.0%). The company witnessed a deceleration in its
Consumer Financial Marketing Services segment (down 4.0%).
Total International (including Europe, Canada and Latin America)
revenue grew 2.0% year over year to $121.0 million, mostly due to a
4.0% growth recognized in Latin America and 3.0% in Europe. The
Canada Consumer segment remained unchanged in U.S. dollar
terms.
Revenue from the Total Workforce Solutions segment increased 14.0%
year over year to $117.0 million. The upside resulted from a 33.0%
year-over-year increase in Verification Services revenue, partially
offset by a 5.0% decline in Employer Services revenue.
North American Personal Solutions contributed $51.4 million,
reflecting 13.0% year-over-year improvement. North American
Commercial Solutions generated $21.2 million, down 2.0% from the
year-ago quarter.
Operating Results
Gross margin in the third quarter was 61.7%, down 20 basis points
from the year-ago quarter. Operating margin was 24.3% as against
24.8% a year ago. The margin performance was better in USCIS and
Workforce Solutions, offset by weak performances of International,
North America Personal Solutions and North America Commercial
Solutions segments.
The company reported higher operating expenses with selling,
general and administrative expenditure increasing 14.9% year over
year. Depreciation and amortization expenses remained unchanged at
$40.5 million.
On a GAAP basis, net income from continuing operations was $77.9
million or 64 cents per share versus $66.7 million or 54 cents per
share in the comparable quarter last year. Excluding the impact of
acquisition-related amortization expense, net of tax, adjusted net
income was $92.2 million or 75 cents per share, up 16.0% from $80.5
million or 65 cents in the year-ago quarter.
Balance Sheet, Cash Flow
Equifax exited the quarter with $267.2 million in cash and cash
equivalents, up from $183.1 million in the previous quarter.
Accounts receivables were $296.9 million. Total long-term debt was
$968.3 million, down from $968.8 million in the prior quarter. Cash
provided by operating activities was $151.7 million, compared with
$152.1 million in the prior quarter.
During the third quarter, Equifax bought back 0.7 million of common
shares for $33.9 million. As of September 30, 2012, roughly $227.1
million worth shares remain under the current authorization.
Equifax paid a quarterly dividend of 18 cents per share.
Guidance
For the fourth quarter of 2012, Equifax expects revenue to be up
8.0% to 10.0% from the year-ago quarter, based on contributions
from domestic and international businesses and ongoing foreign
exchange rates. Excluding the impact of acquisition-related
amortization expense, Equifax expects adjusted earnings per share
to range between 72 cents and 76 cents. The Zacks Consensus
Estimate for the fourth quarter is 73 cents, which is toward the
lower end of the company’s guidance.
Our Take
Equifax exited the third quarter with flying colors, surpassing the
Zacks Consensus Estimates both on the top and bottom lines. We are
optimistic about Equifax’ revenue growth prospects and improving
margins, as reflected in its guidance.
Management’s efforts regarding strategic initiatives for product
innovation, broadening data assets through acquisitions and
continuous share gains in North America were encouraging.
Given the company’s strong correlation to consumer and financial
markets, as well as its U.S. and European exposure, we see a
gradual improvement in results. But stiff competition from
Automatic Data Processing Inc. (ADP) is a
concern.
Currently, Equifax has a Zacks #3 Rank implying a short-term “Hold”
rating.
AUTOMATIC DATA (ADP): Free Stock Analysis Report
EQUIFAX INC (EFX): Free Stock Analysis Report
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