Equifax Reports Solid, Broad-Based Results with Record Revenue in Second Quarter of 2006
ATLANTA, July 20, 2006 Equifax Inc. (NYSE: EFX) today reported second quarter of 2006 earnings with record revenue. In the quarter ended June 30, revenue was $387.7 million, a 7 percent increase from the second quarter of 2005. Net income was $69.6 million, an 11 percent increase from the same quarter in 2005. Diluted earnings per share totaled $0.53, a 13 percent increase from the second quarter of 2005.
On a non-GAAP basis, excluding the impact of certain litigation matters in the second quarter of 2006 and the incremental impact of adopting Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment” (“SFAS 123R”), net income was $66.5 million, a 6 percent increase from the second quarter of 2005, and diluted earnings per share totaled $0.51, an 8 percent increase from the second quarter of 2005.
"Once again, North America, Europe and Latin America provided great momentum in a very challenging environment. I am also pleased with the growth of our commercial business in the U.S.," said Richard F. Smith, Equifax Chairman and Chief Executive Officer. “Our European operations improved significantly, while Personal Solutions made meaningful progress on its long-term targets for growth and profitability."
Second Quarter 2006 Highlights
- Operating margin was 25 percent in the second quarter of 2006 compared to 29 percent in the second quarter of 2005. On a non-GAAP basis, excluding the impact of certain litigation matters, operating margin was 28 percent in the second quarter of 2006.
- Cash provided by operating activities for the second quarter of 2006 was $90.7 million.
- Equifax repurchased 1.4 million shares of its common stock on the open market for $52.0 million.
- In June 2006, Equifax consummated a settlement of claims against certain former selling shareholders of Naviant, Inc., an acquisition in 2002, which resulted in a $14.1 million non-taxable gain recorded in other income, net and $0.11 impact on diluted earnings per share.
- Equifax recognized a loss contingency in operating expenses associated with certain litigation matters related to Personal Solutions, which resulted in an $8.7 million loss, net of tax, and $0.07 impact on diluted earnings per share.
- The negative incremental impact during the second quarter of 2006 due to our adoption on January 1, 2006 of SFAS 123R was $2.3 million, net of tax, of additional stock-based compensation expense and $0.02 on diluted earnings per share.
North America
Total revenue was $311.6 million in the second quarter, a 5 percent increase from the second quarter of 2005. Operating margin for North America was 33 percent in the second quarter of 2006 compared to 38 percent in the second quarter of 2005. On a non-GAAP basis, excluding the impact of certain litigation matters, operating margin was 37 percent in the second quarter of 2006.
- North America Information Services revenue was $211.1 million, up 3 percent compared to the second quarter of 2005.
- Marketing Services revenue was $69.3 million, up 10 percent compared to the second quarter of 2005.
- Personal Solutions revenue was $31.2 million, up 7 percent compared to the second quarter of 2005.
Europe
Total revenue was $37.6 million, up 7 percent compared to the second quarter of 2005. In local currency, revenue was up 9 percent when compared to the same period in the prior year. Operating margin was 25 percent, up from 22 percent in the second quarter of 2005.
Latin America
Total revenue rose to $38.5 million, up 26 percent compared to the second quarter of 2005. In local currency, revenue was up 17 percent when compared to the same period in the prior year. Operating margin was 29 percent, up from 26 percent in the second quarter of 2005.
About Equifax (www.equifax.com)
Equifax Inc. is a global leader in information technology that enables and secures global commerce with consumers and businesses. We are one of the largest sources of consumer and commercial data. Utilizing our databases, advanced analytics and proprietary enabling technology, we provide real-time answers for our customers. This innovative ability to transform information into intelligence is valued by customers across a wide range of industries and markets. Headquartered in Atlanta, Georgia, Equifax employs approximately 4,700 people in 13 countries throughout North America, Latin America and Europe. Equifax was founded 107 years ago, and today is a member of Standard & Poor's (S&P;) 500® Index. Our common stock is traded on the New York Stock Exchange under the symbol EFX.
Earnings Conference Call and Webcast
Equifax's quarterly teleconference to discuss the second quarter earnings release will be held today at 9:00 a.m. (EDT). The live audio Webcast of the speakers’ presentations will be available at www.equifax.com and a replay will be available at the same site shortly after the conclusion of the Webcast. This press release, the financial tables, as well as other supplemental information, are also available at that Web site.
Supplemental Financial Information and Non-GAAP Financial Measures
The Common Questions and Answers (Unaudited) (“Q&A;”) that are a part of this press release include supplemental financial information which Equifax believes is useful to assess its operating performance. The following financial measures included herein or in the Q&A; are not prepared in accordance with U.S. generally accepted accounting principles (“GAAP”): free cash flow; net income and diluted earnings per share, excluding certain litigation matters and incremental impact of SFAS 123R; and operating income (loss) and operating margin, excluding the litigation loss contingency for certain business segments. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is presented in the Q&A.; This information can also be found under "Our Company/Investor Center/Non-GAAP/GAAP Financial Measures" on our Web site at www.equifax.com. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
Caution Concerning Forward-Looking Statements
Statements in this press release that relate to Equifax's future plans, objectives, expectations, performance, events and the like may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Future events, risks and uncertainties, individually or in the aggregate, could cause our actual results to differ materially from those expressed or implied in these forward-looking statements. Those factors include, but are not limited to, changes in worldwide and U.S. economic conditions that materially impact consumer spending and consumer debt, changes in demand for Equifax's products and services, our ability to develop new products and services, pricing and other competitive pressures, risks relating to illegal third party efforts to access data, risks associated with the integration of acquisitions and other investments, changes in laws and regulations governing our business, including federal or state responses to identity theft concerns, the outcome of pending litigation and certain other factors discussed under the caption "Risk Factors" in the Management's Discussion and Analysis section of Equifax's Annual Report on Form 10-K for the year ended December 31, 2005, and in our other filings with the Securities and Exchange Commission. Equifax assumes no obligation to update any forward-looking statements to reflect events that occur or circumstances that exist after the date on which they were made.
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Contact Information:
Jeff Dodge
Investor Relations
(404) 885-8804
jeff.dodge@equifax.com
David Rubinger
Media Relations
(404) 885-8555
david.rubinger@equifax.com
