Equifax’s (EFX) fourth quarter 2009 EPS of 61 cents exceeded the Zacks Consensus Estimate by 5 cents.
Revenue
Revenue for the quarter was $464.3 million, up 4.0% from $446.6 million reported in the year-ago quarter. Approximately 3.0% of the increase was due to the unfavorable effect of foreign exchange rates. This can be attributed to increase in revenue across most of its business segments except for “U.S. Consumer Information” and “North America Personal”.
Segment-wise, North American Commercial Solutions contributed $22.2 million, up 11.0% year-over-year. North American Personal Solutions contributed $36.0 million, down 3.0% year-over-year. International (including Europe, Canada and Latin America) contributed $117.7 million, up 11.0% year-over-year. Of this Europe remained flat year over year, Latin America up 19.0% and Canada consumer segment up 13.0% in US dollar terms. Even U.S. Consumer Information Solutions, which contributed $199.0 million, was down 4.0% year-over-year. The TALX segment, which generated $89.4 million, increased 19.0% year-over-year. The TALX segment revenue increased as a result of increase in revenue of its sub-segments, Work Number revenue and Tax & Talent Management Services revenue.
Operating Results
The gross margin for the fourth quarter was 57.8% versus 58.7% in the year-ago quarter. Gross margin declined as cost of sales increased at a higher rate than revenue. Operating margin was 19.7% versus 25.9% in the year-ago quarter. This decline can be attributed to the substantial increase in operating expense (particularly SG&A, up 24.9% year over year) compared to the year ago quarter. The company recognized a tax benefit of $7.3 million related to its ability to utilize foreign tax credits beyond 2009.
Net income on GAAP basis for the quarter was $60.2 million or $0.47 per share versus net income of $64.0 million or $0.50 in the same quarter last year. Excluding the impact of acquisition-related amortization expense, a restructuring charge (both net of tax) and an income tax benefit, non-GAAP net income was $77.9 million or $0.61 per share, flat compared to the third quarter of 2008. This was above management guidance range of $0.53 to $0.58.
Balance Sheet
The company exited the quarter with $103.1 million in cash and cash equivalents, up $125.4 million sequentially. Total debt at December 31, 2009 increased $105.0 million from September 30, 2009 reflecting additional borrowings to finance a portion of the company’s expansion activities.
Fiscal Year 2009 Results
Revenue for full year 2009 was $1.82 billion, down 6.0% from the year-ago quarter, of which 3.0% was due to the unfavorable effect of foreign exchange rates. Net income for 2009 was $233.9 million compared to $272.8 million in 2008. Excluding the impact of acquisition-related amortization expense, restructuring charges and certain income tax benefits, net income for the quarter was $297.7 million. This translated into an EPS of $1.83 compared to $2.09 for full year 2008. Excluding special items, non-GAAP EPS, was $2.33, down 6.0% from the prior year period.
Guidance
For the first quarter of 2010, Equifax has provided an adjusted EPS guidance range of $0.53 to $0.57 and expects revenue to be up in the low single digit range from the year-ago period.
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