ATLANTA, Oct. 18,
2023 /PRNewswire/ -- Equifax® (NYSE:
EFX) today announced financial results for the quarter ended
September 30, 2023.
- Third quarter 2023 revenue of $1.319
billion up 6% and up 6.5% in local currency against a weaker
than expected mortgage market estimated to be down 29% based on
Equifax mortgage credit inquiries and the strengthening U.S.
dollar, which negatively impacted revenue. Excluding Brazil revenue of $23
million that was not included in July guidance, third
quarter revenue of $1.296 billion was
up 4% and up 5% in local currency.
- Strong execution of the 2023 Cloud spending reduction plan,
delivering savings of $210 million
and 2024 run rate savings of $275
million.
- Organic local currency non-mortgage revenue growth of 7% with
strong new product innovation leveraging the Equifax Cloud and
record New Product Vitality Index of 15%.
- Workforce Solutions non-mortgage revenue up a strong 11% from
very strong Government growth. Total revenue up 3% due to
challenging mortgage market.
- USIS revenue up 7%, with B2B non-mortgage revenue growth of 8%
and strong 10% B2B Online non-mortgage revenue growth.
- International revenue grew 10% on a reported basis and 12% on a
local currency basis, with organic local currency revenue growth of
3%.
- Closed the acquisition of Boa Vista Serviços, the second
largest credit bureau in Brazil,
which will expand Equifax capabilities in the large and
fast-growing Brazilian market.
- Revising guidance down to reflect the impact of weaker than
expected U.S. mortgage market and foreign exchange, partially
offset by acquisition of Boa Vista Serviços. Reducing full year
2023 guidance at the midpoint to revenue of $5.256 billion and Adjusted EPS of $6.67 per share.
"Equifax executed well against our strategic priorities, our
$210 million spending reduction plan,
and earnings framework in the third quarter, despite lower than
expected revenue principally due to a challenging mortgage market
as well as foreign exchange. Revenue of $1.319 billion, including $23 million of revenue from the Boa Vista
acquisition, was up 6% with Adjusted EPS of $1.76 per share up 2% versus last year. Equifax
had strong organic local currency non-mortgage revenue growth of 7%
from continued strong new product performance with a record New
Product Vitality Index of 15%. However, throughout the quarter, we
saw U.S. mortgage activity decline to levels below our expectations
as interest rates increased, which impacted mortgage revenue in
Workforce Solutions and USIS. Workforce Solutions delivered strong
11% non-mortgage revenue growth from very strong revenue growth in
Government. USIS delivered a strong quarter, with strong B2B Online
non-mortgage revenue growth of 10%, and International delivered
total local currency revenue growth of 12% and organic local
currency revenue growth of 3%.
In August, we closed the acquisition of Boa Vista Serviços, the
second largest credit bureau in Brazil. This acquisition will expand Equifax
capabilities in the large and fast-growing Brazilian market and add
to our diverse International portfolio while giving Boa Vista
Serviços access to our expansive global capabilities and
cloud-native data, products, decisioning and analytical technology
for the rapid development of new products and services, and
expansion into new industries." said Mark
W. Begor, Equifax Chief Executive Officer.
"We are reducing full year 2023 guidance at the midpoint to
revenue of $5.256 billion and
Adjusted EPS guidance of $6.67 per
share, a reduction of $44 million and
$0.31 per share, respectively. The
reduction in both revenue and Adjusted EPS are principally due to
the weaker U.S. mortgage market and the impact of foreign exchange
partially offset by the benefit from our Boa Vista acquisition. We
expect the weaker U.S. mortgage market at current high interest
rates to continue in the fourth quarter, and we now expect full
year Equifax mortgage credit inquiries to decline about 34%, which
is down over 3 percentage points from our prior framework.
While the second half of 2023 has been challenging with the
accelerated decline in the U.S. mortgage market, we are energized
by the expected strong 13% non-mortgage revenue growth in the
fourth quarter, which represents over 85% of Equifax revenue. We
are confident in the future of the New Equifax as we move toward
completion of our EFX Cloud and Data transformation, leveraging our
new Cloud capabilities to accelerate new product roll-outs that
'Only Equifax' can provide, which will drive growth in 2024 and
beyond. We are energized about the New Equifax that will deliver
higher margins and free cash flow."
Financial Results Summary
The company reported revenue of $1,319.1
million in the third quarter of 2023, up 6% compared to the
third quarter of 2022 on a reported basis and up 7% on a local
currency basis.
Net income attributable to Equifax of $162.2 million was down 2% in the third quarter
of 2023 compared to $165.7 million in
the third quarter of 2022.
Diluted EPS attributable to Equifax was $1.31 for the third quarter of 2023, down 2%
compared to $1.34 in the third
quarter of 2022.
Workforce Solutions third quarter results
- Total revenue was $577.2 million
in the third quarter of 2023, up 3% compared to the third quarter
of 2022. Operating margin for Workforce Solutions was 41.8% in the
third quarter of 2023 compared to 41.3% in the third quarter of
2022. Adjusted EBITDA margin for Workforce Solutions was 50.9% in
the third quarter of 2023 compared to 49.5% in the third quarter of
2022.
- Verification Services revenue was $459.3
million, up 1% compared to the third quarter of 2022.
- Employer Services revenue was $117.9
million, up 13% compared to the third quarter of 2022.
USIS third quarter results
- Total revenue was $426.0 million
in the third quarter of 2023, up 7% compared to $397.4 million in the third quarter of 2022.
Operating margin for USIS was 21.1% in the third quarter of 2023
compared to 20.6% in the third quarter of 2022. Adjusted EBITDA
margin for USIS was 34.2% in the third quarter of 2023 compared to
34.1% in the third quarter of 2022.
- Online Information Solutions revenue was $348.2 million, up 11% compared to the third
quarter of 2022.
- Mortgage Solutions revenue was $27.3
million, down 15% compared to the third quarter of
2022.
- Financial Marketing Services revenue was $50.5 million, down 1% compared to the third
quarter of 2022.
International third quarter results
- Total revenue was $315.9 million
in the third quarter of 2023, up 10% and 12% compared to the third
quarter of 2022 on a reported and local currency basis,
respectively. Operating margin for International was 12.7% in the
third quarter of 2023, compared to 14.8% in the third quarter of
2022. Adjusted EBITDA margin for International was 26.2% in the
third quarter of 2023, compared to 26.8% in the third quarter of
2022.
- Asia Pacific revenue was
$85.5 million, down 2% and up 2%
compared to the third quarter of 2022 on a reported and local
currency basis, respectively.
- Europe revenue was
$85.2 million, up 6% and down 2%
compared to the third quarter of 2022 on a reported and local
currency basis, respectively.
- Canada revenue was
$65.1 million, down 2% and flat
compared to the third quarter of 2022 on a reported and local
currency basis, respectively.
- Latin America revenue was
$80.1 million, up 48% and 62%
compared to the third quarter of 2022 on a reported and local
currency basis, respectively.
Adjusted EPS and Adjusted EBITDA Margin
- Adjusted EPS attributable to Equifax was $1.76 in the third quarter of 2023, up 2%
compared to the third quarter of 2022.
- Adjusted EBITDA margin was 33.1% in the third quarter of 2023
compared to 32.5% in the third quarter of 2022.
- These financial measures exclude certain items as described
further in the Non-GAAP Financial Measures section below.
2023 Fourth Quarter
and Full Year Guidance(2)
|
|
|
|
Q4
2023
|
|
FY
2023
|
|
Low-End
|
|
High-End
|
|
Low-End
|
|
High-End
|
Reported
Revenue
|
$1.307
billion
|
|
$1.327
billion
|
|
$5.246
billion
|
|
$5.266
billion
|
Reported Revenue
Growth
|
9.1 %
|
|
10.8 %
|
|
2.4 %
|
|
2.8 %
|
Local Currency Growth
(1)
|
9.7 %
|
|
11.4 %
|
|
3.4 %
|
|
3.8 %
|
Organic Local Currency
Growth (1)
|
6.0 %
|
|
7.7 %
|
|
1.1 %
|
|
1.5 %
|
Adjusted Earnings Per
Share
|
$1.72 per
share
|
|
$1.82 per
share
|
|
$6.62 per
share
|
|
$6.72 per
share
|
(1)
|
Refer to page 8 for
definitions.
|
(2)
|
Fourth quarter and full
year guidance includes Boa Vista Serviços revenue of $38 million
and $61 million, respectively.
|
About Equifax
At Equifax (NYSE: EFX), we believe knowledge drives progress. As
a global data, analytics, and technology company, we play an
essential role in the global economy by helping financial
institutions, companies, employers, and government agencies make
critical decisions with greater confidence. Our unique blend of
differentiated data, analytics, and cloud technology drives
insights to power decisions to move people forward. Headquartered
in Atlanta and supported by 14,000
employees worldwide, Equifax operates or has investments in 24
countries in North America,
Central and South America,
Europe, and the Asia Pacific region. For more information,
visit Equifax.com.
Earnings Conference Call and Audio Webcast
In conjunction with this release, Equifax will host a conference
call on October 19, 2023 at
8:30 a.m. (ET) via a live audio
webcast. To access the webcast and related presentation materials,
go to the Investor Relations section of our website at
www.equifax.com. The discussion will be available via replay at the
same site shortly after the conclusion of the webcast. This press
release is also available at that website.
Non-GAAP Financial Measures
This earnings release presents adjusted EPS attributable to
Equifax which is diluted EPS attributable to Equifax adjusted (to
the extent noted above for different periods) for
acquisition-related amortization expense, accrual for legal and
regulatory matters related to the 2017 cybersecurity incident,
fair value adjustment and gain on sale of equity investments,
foreign currency impact of certain intercompany loans,
acquisition-related costs other than acquisition amortization,
income tax effect of stock awards recognized upon vesting or
settlement, Argentina highly
inflationary foreign currency adjustment, realignment of resources
and other costs, gain on settlement of Canada pension plan, and adjustments to
deferred tax balances. All adjustments are net of tax, with a
reconciling item with the aggregated tax impact of the adjustments.
This earnings release also presents (i) adjusted EBITDA and
adjusted EBITDA margin which is defined as consolidated net income
attributable to Equifax plus net interest expense, income taxes,
depreciation and amortization, and also excludes certain one-time
items, (ii) local currency revenue change which is calculated by
conforming 2023 results using 2022 exchange rates and (iii) organic
local currency revenue growth which is defined as local currency
revenue growth, adjusted to reflect an increase in prior year
Equifax revenue from the revenue of acquired companies in the prior
year period. These are important financial measures for Equifax but
are not financial measures as defined by GAAP.
These non-GAAP financial measures should be reviewed in
conjunction with the relevant GAAP financial measures and are not
presented as an alternative measure of net income or EPS as
determined in accordance with GAAP.
Reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures and related notes are
presented in the Q&A. This information can also be found under
"Investor Relations/Financial Information/Non-GAAP Financial
Measures" on our website at www.equifax.com.
Forward-Looking Statements
This release contains forward-looking statements and
forward-looking information. These statements can be identified by
expressions of belief, expectation or intention, as well as
statements that are not historical fact. These statements are based
on certain factors and assumptions including with respect to
foreign exchange rates, expected growth, results of operations,
performance, business prospects and opportunities, the U.S.
mortgage market, economic conditions and effective tax rates. While
the Company believes these factors and assumptions to be reasonable
based on information currently available, they may prove to be
incorrect.
Several factors could cause actual results to differ materially
from those expressed or implied in the forward-looking statements,
including, but not limited to, actions taken by us, including
restructuring or strategic initiatives (including our technology,
data and security cloud transformation, capital investments and
asset acquisitions or dispositions), as well as developments beyond
our control, including, but not limited to, changes in the U.S.
mortgage market environment, as well as changes more generally in
U.S. and worldwide economic conditions that materially impact
consumer spending, such as rising interest rates and inflation,
consumer debt and employment and the demand for Equifax's products
and services. Further deteriorations in economic conditions or
interest rate increases could lead to a further or prolonged
decline in demand for our products and services and negatively
impact our business. It may also continue to impact financial
markets and corporate credit markets which could adversely impact
our access to financing or the terms of any financing. Other risk
factors include the impact of our technology and security
transformation and improvements in our information technology and
data security infrastructure; changes in tax regulations; adverse
or uncertain economic conditions and changes in credit and
financial markets, such as rising interest rates and inflation;
potential adverse developments in new and pending legal proceedings
or government investigations; risks associated with our ability to
comply with business practice commitments and similar obligations
under settlement agreements and consent orders entered into in
connection with the 2017 cybersecurity incident; economic,
political and other risks associated with international sales and
operations; risks relating to unauthorized access to data or
breaches of confidential information due to criminal conduct,
attacks by hackers, employee or insider malfeasance and/or human
error; changes in, and the effects of, laws and regulations and
government policies governing or affecting our business, including,
without limitation, our examination and supervision by the Consumer
Financial Protection Bureau, a federal agency that holds primary
responsibility for the regulation of consumer protection with
respect to financial products and services in the U.S., oversight
by the U.K. Financial Conduct Authority and Information
Commissioner's Office of our debt collections services and core
credit reporting businesses in the U.K., oversight by the Office of
Australian Information Commission, the Australian Competition and
Consumer Commission and other regulatory entities of our credit
reporting business in Australia
and the impact of current privacy laws and regulations, including
the European General Data Protection Regulation and the California
Consumer Privacy Act, or any future privacy laws and regulations;
federal or state responses to identity theft concerns; our ability
to realize the anticipated strategic and financial benefits sought
from acquisitions; our ability to successfully develop and market
new products and services, respond to pricing and other competitive
pressures, complete and integrate acquisitions and other
investments and achieve targeted cost efficiencies; timing and
amount of capital expenditures; changes in capital markets and
corresponding effects on the Company's investments and benefit plan
obligations; foreign currency exchange rates and earnings
repatriation limitations; and the decisions of taxing authorities
which could affect our effective tax rates. A summary of additional
risks and uncertainties can be found in our Annual Report on Form
10-K for the year ended December 31,
2022 including without limitation under the captions "Item
1. Business -- Governmental Regulation" and "-- Forward-Looking
Statements" and "Item 1A. Risk Factors" and in our other filings
with the U.S. Securities and Exchange Commission. Forward-looking
statements are given only as at the date of this release and the
Company disclaims any obligation to update or revise the
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
EQUIFAX
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
Three Months Ended
September 30,
|
|
|
2023
|
|
2022
|
(In millions, except per share amounts)
|
|
(Unaudited)
|
Operating
revenue
|
|
$
1,319.1
|
|
$
1,244.3
|
Operating
expenses:
|
|
|
|
|
Cost of services
(exclusive of depreciation and amortization below)
|
|
585.2
|
|
542.5
|
Selling, general and
administrative expenses
|
|
333.1
|
|
318.0
|
Depreciation and
amortization
|
|
154.4
|
|
140.9
|
Total operating
expenses
|
|
1,072.7
|
|
1,001.4
|
Operating
income
|
|
246.4
|
|
242.9
|
Interest
expense
|
|
(62.8)
|
|
(47.1)
|
Other income,
net
|
|
7.1
|
|
23.9
|
Consolidated income
before income taxes
|
|
190.7
|
|
219.7
|
Provision for income
taxes
|
|
(26.4)
|
|
(52.8)
|
Consolidated net
income
|
|
164.3
|
|
166.9
|
Less: Net income
attributable to noncontrolling interests including redeemable
noncontrolling interests
|
|
(2.1)
|
|
(1.2)
|
Net income attributable
to Equifax
|
|
$
162.2
|
|
$
165.7
|
Basic earnings per
common share:
|
|
|
|
|
Net income
attributable to Equifax
|
|
$
1.32
|
|
$
1.35
|
Weighted-average shares
used in computing basic earnings per share
|
|
123.0
|
|
122.4
|
Diluted earnings per
common share:
|
|
|
|
|
Net income
attributable to Equifax
|
|
$
1.31
|
|
$
1.34
|
Weighted-average shares
used in computing diluted earnings per share
|
|
123.9
|
|
123.3
|
Dividends per common
share
|
|
$
0.39
|
|
$
0.39
|
EQUIFAX
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
September
30,
2023
|
|
December 31,
2022
|
(In millions, except
par values)
|
|
(Unaudited)
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
412.6
|
|
$
285.2
|
Trade accounts
receivable, net of allowance for doubtful accounts of $18.3 and
$19.1 at
September 30, 2023 and December 31, 2022,
respectively
|
|
967.9
|
|
857.7
|
Prepaid
expenses
|
|
142.0
|
|
134.3
|
Other current
assets
|
|
74.9
|
|
93.3
|
Total current
assets
|
|
1,597.4
|
|
1,370.5
|
Property and
equipment:
|
|
|
|
|
Capitalized
internal-use software and system costs
|
|
2,428.2
|
|
2,139.1
|
Data processing
equipment and furniture
|
|
286.3
|
|
281.4
|
Land, buildings and
improvements
|
|
267.1
|
|
261.6
|
Total property and
equipment
|
|
2,981.6
|
|
2,682.1
|
Less accumulated
depreciation and amortization
|
|
(1,218.0)
|
|
(1,095.1)
|
Total property and
equipment, net
|
|
1,763.6
|
|
1,587.0
|
Goodwill
|
|
6,730.8
|
|
6,383.9
|
Indefinite-lived
intangible assets
|
|
95.1
|
|
94.8
|
Purchased intangible
assets, net
|
|
1,903.9
|
|
1,818.5
|
Other assets,
net
|
|
258.1
|
|
293.2
|
Total
assets
|
|
$
12,348.9
|
|
$
11,547.9
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Short-term debt and
current maturities of long-term debt
|
|
$
501.0
|
|
$
967.2
|
Accounts
payable
|
|
190.7
|
|
250.8
|
Accrued
expenses
|
|
267.1
|
|
229.0
|
Accrued salaries and
bonuses
|
|
173.7
|
|
138.7
|
Deferred
revenue
|
|
115.2
|
|
132.9
|
Other current
liabilities
|
|
334.1
|
|
296.6
|
Total current
liabilities
|
|
1,581.8
|
|
2,015.2
|
Long-term
debt
|
|
5,500.4
|
|
4,820.1
|
Deferred income tax
liabilities, net
|
|
468.8
|
|
460.3
|
Long-term pension and
other postretirement benefit liabilities
|
|
97.7
|
|
100.4
|
Other long-term
liabilities
|
|
215.6
|
|
178.6
|
Total
liabilities
|
|
7,864.3
|
|
7,574.6
|
Redeemable
noncontrolling interests
|
|
175.5
|
|
—
|
Equifax shareholders'
equity:
|
|
|
|
|
Preferred stock, $0.01
par value: Authorized shares - 10.0; Issued shares -
none
|
|
—
|
|
—
|
Common stock, $1.25
par value: Authorized shares - 300.0;
Issued shares - 189.3
at September 30, 2023 and December 31, 2022;
Outstanding shares -
123.2 and 122.5 at September 30, 2023 and December 31,
2022,
respectively
|
|
236.6
|
|
236.6
|
Paid-in
capital
|
|
1,736.6
|
|
1,594.2
|
Retained
earnings
|
|
5,524.5
|
|
5,256.0
|
Accumulated other
comprehensive loss
|
|
(563.9)
|
|
(473.7)
|
Treasury stock, at
cost, 65.5 and 66.2 shares at September 30, 2023 and
December 31, 2022,
respectively
|
|
(2,634.6)
|
|
(2,650.7)
|
Stock held by employee
benefit trusts, at cost, 0.6 shares at September 30, 2023
and
December 31, 2022
|
|
(5.9)
|
|
(5.9)
|
Total Equifax
shareholders' equity
|
|
4,293.3
|
|
3,956.5
|
Noncontrolling
interests
|
|
15.8
|
|
16.8
|
Total shareholders'
equity
|
|
4,309.1
|
|
3,973.3
|
Total liabilities,
redeemable noncontrolling interests, and shareholders'
equity
|
|
$
12,348.9
|
|
$
11,547.9
|
EQUIFAX
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
Nine Months Ended
September 30,
|
|
|
2023
|
|
2022
|
(In
millions)
|
|
(Unaudited)
|
Operating
activities:
|
|
|
|
|
Consolidated net
income
|
|
$
417.2
|
|
$
591.1
|
Adjustments to
reconcile consolidated net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
461.0
|
|
424.1
|
Stock-based
compensation expense
|
|
61.3
|
|
50.4
|
Deferred income
taxes
|
|
(67.9)
|
|
47.9
|
Gain on fair market
value adjustment and gain on sale of equity investments
|
|
(13.8)
|
|
(20.2)
|
Changes in assets and
liabilities, excluding effects of acquisitions:
|
|
|
|
|
Accounts receivable,
net
|
|
(86.4)
|
|
(133.6)
|
Other assets, current
and long-term
|
|
(16.0)
|
|
(32.0)
|
Current and long term
liabilities, excluding debt
|
|
39.3
|
|
(496.0)
|
Cash provided by
operating activities
|
|
794.7
|
|
431.7
|
Investing
activities:
|
|
|
|
|
Capital
expenditures
|
|
(455.6)
|
|
(468.4)
|
Acquisitions, net of
cash acquired
|
|
(276.0)
|
|
(437.5)
|
Cash received from
divestitures
|
|
6.9
|
|
98.8
|
Cash used in investing
activities
|
|
(724.7)
|
|
(807.1)
|
Financing
activities:
|
|
|
|
|
Net short-term
borrowings
|
|
(83.6)
|
|
(162.1)
|
Payments on long-term
debt
|
|
(575.0)
|
|
—
|
Borrowings on long-term
debt
|
|
872.9
|
|
749.3
|
Dividends paid to
Equifax shareholders
|
|
(143.7)
|
|
(143.3)
|
Dividends paid to
noncontrolling interests
|
|
(2.8)
|
|
(2.5)
|
Proceeds from exercise
of stock options and employee stock purchase plan
|
|
18.6
|
|
13.5
|
Payment of taxes
related to settlement of equity awards
|
|
(16.9)
|
|
(33.0)
|
Debt issuance
costs
|
|
(6.0)
|
|
(5.4)
|
Cash provided by
financing activities
|
|
63.5
|
|
416.5
|
Effect of foreign
currency exchange rates on cash and cash equivalents
|
|
(6.1)
|
|
(24.1)
|
Increase in cash and
cash equivalents
|
|
127.4
|
|
17.0
|
Cash and cash
equivalents, beginning of period
|
|
285.2
|
|
224.7
|
Cash and cash
equivalents, end of period
|
|
$
412.6
|
|
$
241.7
|
Common Questions & Answers (Unaudited)
(Dollars in
millions)
1. Can you provide a further
analysis of operating revenue by operating segment?
Operating revenue consists of the following components:
(In
millions)
|
|
Three Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Local
Currency
|
|
Organic
Local
Currency
|
Operating
revenue:
|
|
2023
|
|
2022
|
|
$
Change
|
|
%
Change
|
|
% Change
(1)
|
|
% Change
(2)
|
Verification
Services
|
|
$
459.3
|
|
$
454.5
|
|
$
4.8
|
|
1 %
|
|
|
|
1 %
|
Employer
Services
|
|
117.9
|
|
104.4
|
|
13.5
|
|
13 %
|
|
|
|
9 %
|
Total Workforce
Solutions
|
|
577.2
|
|
558.9
|
|
18.3
|
|
3 %
|
|
|
|
3 %
|
Online Information
Solutions
|
|
348.2
|
|
314.4
|
|
33.8
|
|
11 %
|
|
|
|
8 %
|
Mortgage
Solutions
|
|
27.3
|
|
32.1
|
|
(4.8)
|
|
(15) %
|
|
|
|
(15) %
|
Financial Marketing
Services
|
|
50.5
|
|
50.9
|
|
(0.4)
|
|
(1) %
|
|
|
|
(1) %
|
Total U.S. Information
Solutions
|
|
426.0
|
|
397.4
|
|
28.6
|
|
7 %
|
|
|
|
5 %
|
Asia Pacific
|
|
85.5
|
|
87.1
|
|
(1.6)
|
|
(2) %
|
|
2 %
|
|
2 %
|
Europe
|
|
85.2
|
|
80.7
|
|
4.5
|
|
6 %
|
|
(2) %
|
|
(2) %
|
Canada
|
|
65.1
|
|
66.2
|
|
(1.1)
|
|
(2) %
|
|
— %
|
|
— %
|
Latin
America
|
|
80.1
|
|
54.0
|
|
26.1
|
|
48 %
|
|
62 %
|
|
12 %
|
Total
International
|
|
315.9
|
|
288.0
|
|
27.9
|
|
10 %
|
|
12 %
|
|
3 %
|
Total operating
revenue
|
|
$
1,319.1
|
|
$
1,244.3
|
|
$
74.8
|
|
6 %
|
|
7 %
|
|
4 %
|
|
|
(1)
|
Local currency revenue
change is calculated by conforming 2023 results using 2022 exchange
rates.
|
|
|
(2)
|
Organic local currency
revenue growth is defined as local currency revenue growth,
adjusted to reflect an increase in prior year Equifax revenue from
the revenue of acquired companies in the prior year period. This
adjustment is made for 12 months following the
acquisition.
|
2. What is the estimate of the change in
overall U.S. Mortgage Market credit inquiry volume that is included
in the 2023 fourth quarter and full year guidance provided?
The change year over year in total U.S. mortgage credit
inquiries received by Equifax in the third quarter of 2023 was a
decline of 29%. The guidance provided on page 3 assumes a change
year over year in total U.S. Mortgage Market Credit inquiries
received by Equifax in the fourth quarter of 2023 to be a decline
of about 22%. For full year 2023, our guidance assumes a decline of
about 34%.
3. In the third quarter of 2023, what was the revenue impact
of foreign currency versus the July revenue guidance?
The strengthening of the U.S. dollar resulted in a lower third
quarter of 2023 Equifax revenue from foreign currency exchange of
$6 million versus the quarterly revenue guidance we provided
in July 2023.
Reconciliations of Non-GAAP Financial Measures to the
Comparable GAAP Financial Measures (Unaudited)
(Dollars in
millions, except per share amounts)
A. Reconciliation of net income
attributable to Equifax to diluted EPS attributable to Equifax,
defined as net income adjusted for acquisition-related amortization
expense, accrual for legal and regulatory
matters related to the 2017 cybersecurity incident,
fair value adjustment and gain on sale of equity investments,
foreign currency impact of certain intercompany loans,
acquisition-related costs other than acquisition amortization,
income tax effect of stock awards recognized upon vesting or
settlement, Argentina highly
inflationary foreign currency adjustment, realignment of resources
and other costs, gain on settlement of Canada pension plan, adjustments to deferred
tax balances and aggregated tax impact of these
adjustments:
|
|
Three Months Ended
September 30,
|
|
|
|
|
(In millions, except
per share amounts)
|
|
2023
|
|
2022
|
|
$ Change
|
|
% Change
|
Net income attributable
to Equifax
|
|
$
162.2
|
|
$
165.7
|
|
$
(3.5)
|
|
(2) %
|
Acquisition-related
amortization expense of certain acquired intangibles
(1)
|
|
64.4
|
|
59.1
|
|
5.3
|
|
9 %
|
Accrual for legal and
regulatory matters related to the 2017 cybersecurity incident
(2)
|
|
14.2
|
|
0.2
|
|
14.0
|
|
nm
|
Fair market value
adjustment and gain on sale of equity investments
(3)
|
|
0.2
|
|
(17.5)
|
|
17.7
|
|
nm
|
Foreign currency impact
of certain intercompany loans (4)
|
|
(0.4)
|
|
(0.5)
|
|
0.1
|
|
(20) %
|
Acquisition-related
costs other than acquisition amortization (5)
|
|
24.4
|
|
19.1
|
|
5.3
|
|
28 %
|
Income tax effects of
stock awards that are recognized upon vesting or settlement
(6)
|
|
(0.3)
|
|
(0.2)
|
|
(0.1)
|
|
50 %
|
Argentina highly
inflationary foreign currency adjustment (7)
|
|
0.4
|
|
(0.2)
|
|
0.6
|
|
nm
|
Realignment of
resources and other costs (8)
|
|
(2.3)
|
|
—
|
|
(2.3)
|
|
nm
|
Gain on settlement of
Canada pension plan (9)
|
|
—
|
|
(2.2)
|
|
2.2
|
|
nm
|
Adjustments to deferred
tax balances (10)
|
|
(28.2)
|
|
—
|
|
(28.2)
|
|
nm
|
Tax impact of
adjustments (11)
|
|
(16.7)
|
|
(10.6)
|
|
(6.1)
|
|
58 %
|
Net income attributable
to Equifax, adjusted for items listed above
|
|
$
217.9
|
|
$
212.9
|
|
$
5.0
|
|
2 %
|
Diluted EPS
attributable to Equifax, adjusted for the items listed
above
|
|
$
1.76
|
|
$
1.73
|
|
$
0.03
|
|
2 %
|
Weighted-average shares
used in computing diluted EPS
|
|
123.9
|
|
123.3
|
|
|
|
|
|
|
(1)
|
During the third
quarter of 2023, we recorded acquisition-related amortization
expense of certain acquired intangibles of $64.4 million ($51.7
million, net of tax). We calculate this financial measure by
excluding the impact of acquisition-related amortization expense
and including a benefit to reflect the significant cash income tax
savings resulting from the income tax deductibility of amortization
for certain acquired intangibles. The $12.7 million of tax is
comprised of $16.7 million of tax expense net of $4.0 million of a
cash income tax benefit. During the third quarter of 2022, we
recorded acquisition-related amortization expense of certain
acquired intangibles of $59.1 million ($48.1 million, net of tax).
The $11.0 million of tax is comprised of $15.1 million of tax
expense net of $4.1 million of a cash income tax benefit. See the
Notes to this reconciliation for additional detail.
|
|
|
(2)
|
During the third
quarter of 2023, we recorded an accrual for legal and regulatory
matters related to the 2017 cybersecurity incident
of $14.2 million primarily driven by our accrual for a
penalty associated with resolution of the investigation of the
incident by the Financial Conduct Authority in the United Kingdom.
During the third quarter of 2022, we recorded an accrual for legal
and regulatory matters related to the 2017 cybersecurity incident
of $0.2 million ($0.1 million, net of tax). See the Notes
to this reconciliation for additional detail.
|
|
|
(3)
|
During the third
quarter of 2023, we recorded a loss on the fair market value
adjustment of equity investments of $0.2 million
($0.1 million, net of tax). During the third quarter of 2022,
we recorded an unrealized gain on the fair market value adjustment
and gain on sale of equity investments of $17.5 million
($11.4 million, net of tax). The fair value adjustments were
recorded to the Other income, net line item within the Consolidated
Statements of Income. See the Notes to this reconciliation for
additional details.
|
|
|
(4)
|
During the third
quarter of 2023, we recorded a foreign currency gain on certain
intercompany loans of $0.4 million. During the third quarter
of 2022, we recorded a foreign currency gain on certain
intercompany loans of $0.5 million. The impact was recorded to
the Other income, net line item within the Consolidated Statements
of Income. See the Notes to this reconciliation for additional
detail.
|
|
|
(5)
|
During the third
quarter of 2023, we recorded $24.4 million
($19.9 million, net of tax) for acquisition-related costs
other than acquisition amortization. During the third quarter of
2022, we recorded $19.1 million ($14.4 million, net of
tax) for acquisition-related costs other than acquisition
amortization. These costs primarily related to integration costs
resulting from recent acquisition activity and were recorded in
operating income. See the Notes to this reconciliation for
additional detail.
|
|
|
(6)
|
During the third
quarter of 2023, we recorded a tax benefit of $0.3 million
related to the tax effects of deductions for stock compensation in
excess of amounts recorded for compensation costs. During the third
quarter of 2022, we recorded a tax benefit of $0.2 million
related to the tax effects of deductions for stock compensation
expense in excess of amounts recorded for compensation costs. See
the Notes to this reconciliation for additional detail.
|
|
|
(7)
|
Argentina experienced
multiple periods of increasing inflation rates, devaluation of the
peso, and increasing borrowing rates. As such, Argentina was deemed
a highly inflationary economy by accounting policymakers in 2018.
During the third quarter of 2023 and 2022, we recorded a
foreign currency loss of $0.4 million and a foreign currency
gain of $0.2 million, respectively, related to the impact of
remeasuring the peso denominated monetary assets and liabilities as
a result of Argentina being a highly inflationary economy. See the
Notes to this reconciliation for additional detail.
|
|
|
(8)
|
During the
third quarter of 2023, we recorded an adjustment of
$2.3 million ($1.7 million, net of tax) to previous
restructuring charges as we refined our estimate for the
realignment of resources and other costs recorded in Q2 2023. See
the Notes to this reconciliation for additional detail.
|
|
|
(9)
|
During the third
quarter of 2022, we recorded a gain on the settlement of Canada
pension plan of $2.2 million ($3.1 million, net of tax). We
received a tax deduction for the settlement payments made resulting
in a tax benefit. The impact is recorded to the Other income, net
line item within the Consolidated Statements of Income. See the
Notes to this reconciliation for additional details.
|
|
|
(10)
|
During the third
quarter of 2023, we recorded a tax benefit of $28.2 million related
to the write off of a deferred tax liability related to our
original investment in Boa Vista Serviços as a result of our
purchase of the remaining interest in Boa Vista Serviços in
the same quarter. See Notes to this reconciliation for additional
detail.
|
|
|
(11)
|
During the third
quarter of 2023, we recorded the tax impact of adjustments of
$16.7 million comprised of (i) acquisition-related
amortization expense of certain acquired intangibles of
$12.7 million ($16.7 million of tax expense net of
$4.0 million of cash income tax benefit), (ii) a tax
adjustment of $0.1 million related to the fair market value
adjustment of equity investments, (iii) a tax adjustment of
$4.5 million related to acquisition-related costs other than
acquisition amortization and (iv) a tax adjustment of
$0.6 million related to the realignment of
resources.
|
|
|
|
During the third
quarter of 2022, we recorded the tax impact of adjustments of
$10.6 million comprised of (i) acquisition-related
amortization expense of certain acquired intangibles of
$11.0 million ($15.1 million of tax expense net of
$4.1 million of cash income tax benefit), (ii) a tax
adjustment of $0.1 million related to an accrual for legal and
regulatory matters related to the 2017 cybersecurity incident,
(iii) a tax adjustment of $6.1 million related to the gain on
fair market value adjustment and gain on sale of equity investment,
(iv) a tax adjustment of $4.7 million related to
acquisition-related costs other than acquisition amortization and
(v) a tax adjustment of $0.9 million related to the gain on
settlement of Canada pension plan.
|
B. Reconciliation of net income
attributable to Equifax to adjusted EBITDA, defined as net income
excluding income taxes, interest expense, net, depreciation and
amortization expense, accrual for legal and regulatory matters
related to the 2017 cybersecurity incident, fair value adjustment
and gain on sale of equity investments, foreign currency impact of
certain intercompany loans, acquisition-related costs other than
acquisition amortization, Argentina highly inflationary foreign currency
adjustment, realignment of resources and other costs, gain on
settlement of Canada pension and
presentation of adjusted EBITDA margin:
|
|
Three Months Ended
September 30,
|
|
|
|
|
(in
millions)
|
|
2023
|
|
2022
|
|
$
Change
|
|
%
Change
|
Revenue
|
|
$
1,319.1
|
|
$
1,244.3
|
|
$
74.8
|
|
6 %
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Equifax
|
|
$
162.2
|
|
$
165.7
|
|
$
(3.5)
|
|
(2) %
|
Income taxes
|
|
26.4
|
|
52.8
|
|
(26.4)
|
|
(50) %
|
Interest expense,
net*
|
|
56.6
|
|
46.6
|
|
10.0
|
|
21 %
|
Depreciation and
amortization
|
|
154.4
|
|
140.9
|
|
13.5
|
|
10 %
|
Accrual for legal and
regulatory matters related to 2017 cybersecurity incident
(1)
|
|
14.2
|
|
0.2
|
|
14.0
|
|
nm
|
Fair market value
adjustment and gain on sale of equity investments
(2)
|
|
0.2
|
|
(17.5)
|
|
17.7
|
|
nm
|
Foreign currency impact
of certain intercompany loans (3)
|
|
(0.4)
|
|
(0.5)
|
|
0.1
|
|
(20) %
|
Acquisition-related
amounts other than acquisition amortization
(4)
|
|
24.4
|
|
19.1
|
|
5.3
|
|
28 %
|
Argentina highly
inflationary foreign currency adjustment (5)
|
|
0.4
|
|
(0.2)
|
|
0.6
|
|
nm
|
Realignment of
resources and other costs (6)
|
|
(2.3)
|
|
—
|
|
(2.3)
|
|
nm
|
Gain on settlement of
Canada pension plan (7)
|
|
—
|
|
(2.2)
|
|
2.2
|
|
nm
|
Adjusted EBITDA,
excluding the items listed above
|
|
$
436.1
|
|
$
404.9
|
|
$
31.2
|
|
8 %
|
Adjusted EBITDA
margin
|
|
33.1 %
|
|
32.5 %
|
|
|
|
|
|
nm - not
meaningful
|
*Excludes interest
income of $6.2 million in 2023 and $0.5 million 2022.
|
|
(1)
|
During the third
quarter of 2023, we recorded an accrual for legal and regulatory
matters related to the 2017 cybersecurity incident of $14.2 million
primarily driven by our accrual for a penalty associated with
resolution of the investigation of the incident by the Financial
Conduct Authority in the United Kingdom. During the third quarter
of 2022, we recorded an accrual for legal and regulatory matters
related to the 2017 cybersecurity incident of $0.2 million ($0.1
million, net of tax). See the Notes to this reconciliation for
additional detail.
|
|
|
(2)
|
During the third
quarter of 2023, we recorded a loss on the fair market value
adjustment of equity investments of $0.2 million
($0.1 million, net of tax). During the third quarter of 2022,
we recorded an unrealized gain on the fair market value adjustment
and gain on sale of equity investments of $17.5 million
($11.4 million, net of tax). The fair value adjustments were
recorded to the Other income, net line item within the Consolidated
Statements of Income. See the Notes to this reconciliation for
additional details.
|
|
|
(3)
|
During the third
quarter of 2023, we recorded a foreign currency gain on certain
intercompany loans of $0.4 million. During the third quarter
of 2022, we recorded a foreign currency gain on certain
intercompany loans of $0.5 million. See the Notes to this
reconciliation for additional detail.
|
|
|
(4)
|
During the third
quarter of 2023, we recorded $24.4 million
($19.9 million, net of tax) for acquisition-related costs
other than acquisition amortization. During the third quarter of
2022, we recorded $19.1 million ($14.4 million, net of
tax) for acquisition-related costs other than acquisition
amortization. These costs primarily related to integration costs
resulting from recent acquisition activity and were recorded in
operating income. See the Notes to this reconciliation for
additional detail.
|
|
|
(5)
|
Argentina experienced
multiple periods of increasing inflation rates, devaluation of the
peso, and increasing borrowing rates. As such, Argentina was deemed
a highly inflationary economy by accounting policymakers in 2018.
During the third quarter of 2023 and 2022, we recorded a
foreign currency loss of $0.4 million and a foreign currency
gain of $0.2 million, respectively, related to the impact of
remeasuring the peso denominated monetary assets and liabilities as
a result of Argentina being a highly inflationary economy. See the
Notes to this reconciliation for additional detail.
|
|
|
(6)
|
During the third
quarter of 2023, we recorded an adjustment of $2.3 million ($1.7
million, net of tax) to previous restructuring charges as we
refined our estimate for the realignment of resources and other
costs recorded in Q2 2023. See the Notes to this reconciliation for
additional detail.
|
|
|
(7)
|
During the third
quarter of 2022, we recorded a gain on the settlement of Canada
pension plan of $2.2 million ($3.1 million, net of tax). We
received a tax deduction for the settlement payments made resulting
in a tax benefit. The impact is recorded to the Other income, net
line item within the Consolidated Statements of Income. See the
Notes to this reconciliation for additional details.
|
C. Reconciliation of operating income by
segment to Adjusted EBITDA, excluding depreciation and amortization
expense, other income, net, noncontrolling interest, accrual for
legal and regulatory matters related to the 2017 cybersecurity
incident, fair value adjustment and gain on sale of equity
investments, foreign currency impact of certain intercompany loans,
acquisition-related costs other than acquisition amortization,
Argentina highly inflationary
foreign currency adjustment, realignment of resources and other
costs, gain on settlement of Canada pension and presentation of adjusted
EBITDA margin for each of the segments:
(In
millions)
|
Three Months Ended
September 30, 2023
|
|
|
Workforce
Solutions
|
|
U.S.
Information
Solutions
|
|
International
|
|
|
General
Corporate
Expense
|
|
Total
|
|
|
|
|
|
|
Revenue
|
|
$
577.2
|
|
$
426.0
|
|
$
315.9
|
|
|
—
|
|
$
1,319.1
|
Operating
income
|
|
241.2
|
|
89.7
|
|
40.2
|
|
|
(124.7)
|
|
246.4
|
Depreciation and
amortization
|
|
44.2
|
|
51.1
|
|
39.7
|
|
|
19.4
|
|
154.4
|
Other income,
net*
|
|
—
|
|
(0.2)
|
|
1.9
|
|
|
(0.8)
|
|
0.9
|
Noncontrolling
interest
|
|
—
|
|
—
|
|
(2.1)
|
|
|
—
|
|
(2.1)
|
Adjustments
(1)
|
|
8.3
|
|
5.2
|
|
3.2
|
|
|
19.8
|
|
36.5
|
Adjusted
EBITDA
|
|
$
293.7
|
|
$
145.8
|
|
$
82.9
|
|
|
$
(86.3)
|
|
$
436.1
|
Operating
margin
|
|
41.8 %
|
|
21.1 %
|
|
12.7 %
|
|
|
nm
|
|
18.7 %
|
Adjusted EBITDA
margin
|
|
50.9 %
|
|
34.2 %
|
|
26.2 %
|
|
|
nm
|
|
33.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
nm - not
meaningful
*Excludes interest
income of $5.7 million in International and $0.5 million in General
Corporate Expense.
|
|
(In
millions)
|
Three Months Ended
September 30, 2022
|
|
|
Workforce
Solutions
|
|
U.S.
Information
Solutions
|
|
International
|
|
|
General
Corporate
Expense
|
|
Total
|
|
|
|
|
|
|
Revenue
|
|
$
558.9
|
|
$
397.4
|
|
$
288.0
|
|
|
—
|
|
$
1,244.3
|
Operating
income
|
|
231.0
|
|
82.0
|
|
42.5
|
|
|
(112.6)
|
|
242.9
|
Depreciation and
amortization
|
|
40.2
|
|
49.6
|
|
32.6
|
|
|
18.5
|
|
140.9
|
Other income,
net*
|
|
—
|
|
1.0
|
|
10.1
|
|
|
12.3
|
|
23.4
|
Noncontrolling
interest
|
|
—
|
|
—
|
|
(1.2)
|
|
|
—
|
|
(1.2)
|
Adjustments
(1)
|
|
5.3
|
|
3.0
|
|
(6.7)
|
|
|
(2.7)
|
|
(1.1)
|
Adjusted
EBITDA
|
|
$
276.5
|
|
$
135.6
|
|
$
77.3
|
|
|
$
(84.5)
|
|
$
404.9
|
Operating
margin
|
|
41.3 %
|
|
20.6 %
|
|
14.8 %
|
|
|
nm
|
|
19.5 %
|
Adjusted EBITDA
margin
|
|
49.5 %
|
|
34.1 %
|
|
26.8 %
|
|
|
nm
|
|
32.5 %
|
|
nm - not
meaningful
*Excludes interest
income of $0.5 million in International.
|
(1)
|
During the third
quarter of 2023, we recorded pre-tax expenses of $14.2 million for
an accrual for legal and regulatory matters related to the 2017
cybersecurity incident, a $0.2 million loss on the fair value
adjustment of equity investments, a $0.4 million foreign currency
gain on certain intercompany loans, $24.4 million for
acquisition-related costs other than acquisition amortization, a
foreign currency loss of $0.4 million related to the impact of
remeasuring the peso denominated monetary assets and liabilities as
a result of Argentina being a highly inflationary economy and
$2.3 million of an adjustment to previous restructuring
charges as we refined our estimate for the realignment of resources
and other costs recorded in Q2 2023.
|
|
|
|
During the third
quarter of 2022, we recorded pre-tax expenses of $0.2 million for
accrual for legal and regulatory matters related to the 2017
cybersecurity incident, a $17.5 million unrealized gain on the fair
value adjustment and gain on sale of equity investments, a $0.5
million foreign currency gain on certain intercompany loans, $19.1
million in acquisition-related costs other than acquisition
amortization, a $0.2 million foreign currency gain related to the
impact of remeasuring the peso denominated monetary assets and
liabilities as a result of Argentina being a highly inflationary
economy and a gain of $2.2 million on the settlement of Canada
pension plan.
|
Notes to Reconciliations of Non-GAAP Financial Measures to
the Comparable GAAP Financial Measures
Diluted EPS attributable to Equifax is adjusted for the
following items:
Acquisition-related amortization expense - During the
third quarter of 2023 and 2022, we recorded acquisition-related
amortization expense of certain acquired intangibles of
$64.4 million ($51.7 million, net of tax) and $59.1 million ($48.1 million, net of tax), respectively. We
calculate this financial measure by excluding the impact of
acquisition-related amortization expense and including a benefit to
reflect the material cash income tax savings resulting from the
income tax deductibility of amortization for certain acquired
intangibles. These financial measures are not prepared in
conformity with GAAP. Management believes excluding the impact of
amortization expense is useful because excluding
acquisition-related amortization and other items that are not
comparable allows investors to evaluate our performance for
different periods on a more comparable basis. Certain acquired
intangibles result in material cash income tax savings which are
not reflected in earnings. Management believes that including a
benefit to reflect the cash income tax savings is useful as it
allows investors to better value Equifax. Management makes these
adjustments to earnings when measuring profitability, evaluating
performance trends, setting performance objectives and calculating
our return on invested capital.
Accrual for legal and regulatory matters related to the 2017
cybersecurity incident - Accrual for legal and regulatory
matters related to the 2017 cybersecurity incident includes legal
fees to respond to subsequent litigation and government
investigations for both periods presented. During the third quarter
of 2023, we recorded an accrual for legal and regulatory matters
related to the 2017 cybersecurity incident of $14.2 million primarily driven by our
accrual for a penalty associated with resolution of the
investigation of the incident by the Financial Conduct Authority in
the United Kingdom. During the
third quarter of 2022, we recorded an accrual for legal and
regulatory matters related to the 2017 cybersecurity incident of
$0.2 million ($0.1 million, net of tax). Management
believes excluding these charges is useful as it allows investors
to evaluate our performance for different periods on a more
comparable basis. Management makes these adjustments to net income
when measuring profitability, evaluating performance trends,
setting performance objectives and calculating our return on
invested capital. This is consistent with how management reviews
and assesses Equifax's historical performance and is useful when
planning, forecasting and analyzing future periods.
Fair market value adjustment and gain on sale of equity
investments - During the third quarter of 2023, we
recorded a $0.2 million
($0.1 million, net of tax) loss
related to adjusting our investment in Brazil to fair value at the date of the
acquisition. On August 7, 2023, we
purchased the remaining interest of our equity investment in
Brazil. The investment in
Brazil has a readily determinable
fair value and the carrying value of the investment was adjusted to
fair value as of the close date, resulting in a loss. Prior to the
acquisition, the investment in Brazil was adjusted to fair value at the end
of each reporting period, with unrealized gains or losses recorded
within the Consolidated Statements of Income in Other income, net.
During the third quarter of 2022 we recorded a $17.5 million ($11.4 million, net of tax) unrealized gain
related to adjusting our investment in Brazil to fair value and gain related to the
sale of an equity method investment. Management believes excluding
these charges from certain financial results provides meaningful
supplemental information regarding our financial results for the
three months ended September 30, 2023 and 2022, since the
non-operating gains or losses are not comparable among the periods.
This is consistent with how our management reviews and assesses
Equifax's historical performance and is useful when planning,
forecasting and analyzing future periods.
Foreign currency impact of certain intercompany loans
- During the third quarter of 2023 and 2022, we recorded a
gain of $0.4 million and
$0.5 million, respectively,
related to foreign currency impact of certain intercompany loans.
Management believes excluding this charge is useful as it allows
investors to evaluate our performance for different periods on a
more comparable basis. This is consistent with how management
reviews and assesses Equifax's historical performance and is useful
when planning, forecasting and analyzing future periods.
Acquisition-related costs other than acquisition
amortization - During the third quarter of 2023 and
2022, we recorded $24.4 million
($19.9 million, net of tax) and
$19.1 million ($14.4 million, net of tax), respectively,
for acquisition-related costs other than acquisition amortization.
These costs primarily related to integration costs resulting from
recent acquisitions and were recorded in operating income.
Management believes excluding this charge from certain financial
results provides meaningful supplemental information regarding our
financial results, since a charge of such an amount is not
comparable among the periods. This is consistent with how our
management reviews and assesses Equifax's historical performance
and is useful when planning, forecasting, and analyzing future
periods.
Income tax effects of stock awards that are recognized upon
vesting or settlement - During the third quarter of 2023,
we recorded a tax benefit of $0.3
million related to the tax effects of deductions for stock
compensation in excess of amounts recorded for compensation costs.
During the third quarter of 2022, we recorded a tax benefit of
$0.2 million related to the tax
effects of deductions for stock compensation in excess of amounts
recorded for compensation costs. Management believes excluding this
tax effect from financial results provides meaningful supplemental
information regarding our financial results for the three months
ended September 30, 2023 and 2022 because these amounts are
non-operating and relate to income tax benefits or deficiencies for
stock awards recognized when tax amounts differ from recognized
stock compensation cost. This is consistent with how management
reviews and assesses Equifax's historical performance and is useful
when planning, forecasting and analyzing future periods.
Argentina highly
inflationary foreign currency adjustment - Argentina
experienced multiple periods of increasing inflation rates,
devaluation of the peso, and increasing borrowing rates. As such,
Argentina was deemed a highly
inflationary economy by accounting policymakers. We recorded a
foreign currency loss of $0.4 million
and a foreign currency gain of $0.2
million during the third quarter of 2023 and 2022,
respectively, as a result of remeasuring the peso denominated
monetary assets and liabilities due to Argentina being highly inflationary.
Management believes excluding this charge is useful as it allows
investors to evaluate our performance for different periods on a
more comparable basis. This is consistent with how management
reviews and assesses Equifax's historical performance and is useful
when planning, forecasting and analyzing future periods.
Adjustment related to the realignment of resources and
other costs - During the third quarter of 2023, we recorded an
adjustment of $2.3 million
($1.7 million, net of tax) to
previous restructuring charges as we refined our estimate for the
realignment of resources and other costs recorded in Q2 2023.
Management believes excluding this adjustment from certain
financial results provides meaningful supplemental information
regarding our financial results for the three months ended
September 30, 2023, since the adjustment is not comparable
among the periods. This is consistent with how our management
reviews and assesses Equifax's historical performance and is useful
when planning, forecasting and analyzing future periods.
Gain on settlement of Canada
pension plan - During the third quarter of 2022, we
recorded an gain on the settlement of our Canada pension plan of $2.2 million ($3.1 million, net of tax). We received a tax
deduction for the settlement payments made resulting in a tax
benefit. Management believes excluding this charge is useful as it
allows investors to evaluate our performance for different periods
on a more comparable basis. The impact is recorded to the Other
income, net line item within the Consolidated Statements of
Income.
Adjustments to deferred tax balances - During the
third quarter of 2023, we recorded a tax benefit of $28.2 million related to the write off of a
deferred tax liability related to our original investment in Boa
Vista Serviços as a result of our purchase of the remaining
interest in Boa Vista Serviços in the same quarter. We
determined the deferred tax balance should no longer be recorded as
a result of our purchase of the remaining interest in Boa Vista
Serviços during the third quarter of 2023. Management believes
excluding this tax effect from certain financial results provides
meaningful supplemental information regarding our financial results
for the three months ended September 30, 2023, since this tax
benefit is not comparable among the periods. This is consistent
with how management reviews and assesses Equifax's historical
performance and is useful when planning, forecasting and analyzing
future periods.
Adjusted EBITDA and EBITDA margin - Management
defines adjusted EBITDA as consolidated net income attributable to
Equifax plus net interest expense, income taxes, depreciation and
amortization and also excludes certain one-time items. Management
believes the use of adjusted EBITDA and adjusted EBITDA margin
allows investors to evaluate our performance for different periods
on a more comparable basis.
Contact:
|
|
Trevor Burns
|
Kate Walker
|
Investor
Relations
|
Media
Relations
|
trevor.burns@equifax.com
|
mediainquiries@equifax.com
|
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SOURCE Equifax Inc.