Equifax Announces 45 Percent E.P.S. Growth For 1999 Fourth Quarter and 16 Percent for 1999
Solid Business Performance Contributes to Record Year; Equifax Announces Expectations for Record 2000
ATLANTA, Jan. 25 /PRNewswire/ -- Equifax Inc. (NYSE: EFX) today reported record fourth quarter and year-end results driven by revenue growth and the strong operating performance of North American Information Services, Payment Services, Europe and Latin America.
For the year, Equifax reported:
-- Revenue of $1.77 billion, a 9.4 percent increase versus 1998;
-- Operating income of $414.5 million, a 13.4 percent increase over the prior year; and
-- Earnings per share of $1.55, a 15.7 percent increase versus 1998.
Fourth quarter highlights which contributed to the Company's record 1999 results include:
-- Revenues for the quarter ending December 31, 1999 climbed 3.4 percent to $464.2 million compared to the prior year period;
-- Operating income increased 25.7 percent to $116.7 million versus $92.8 million in 1998; and
-- Fourth quarter earnings per share were $.45, increasing 45.2 percent versus 1998 fourth quarter results.
"Equifax just completed another record year in 1999," said Tom Chapman, Equifax chairman and chief executive officer. "In addition, fourth quarter results show improving trends versus third quarter in North American Information Services and Europe. Revenue growth was over 7 percent this quarter, excluding the Brazilian currency devaluation. We are very pleased with the overall financial and operating performance in 1999 although our recent stock price has been disappointing. Equifax reported a very strong year with 9.4 percent revenue growth, 15.7 percent E.P.S. growth and an increased operating income margin, despite challenging global economies, particularly in Latin America, as well as the worldwide focus on Y2K readiness.
"We are well-positioned to capitalize on global opportunities and our prospects for domestic growth remain strong. During the fourth quarter, we strengthened our core information business with new talent, innovation, markets, and customers. Bill Catucci joined our company to lead our North American Information Services group, we introduced our direct to consumer initiative, signed new customers such as Federated and AmeriTrade in conjunction with Troy Group; and entered new industries such as insurance and on-line brokerage."
Equifax President and Chief Operating Officer Lee A. Kennedy said: "Our planning and discipline contributed to our successful Y2K transition. We came through smoothly due to the focus, commitment and excellence of our worldwide technology and business operation teams. Equifax continues to grow its global Payment Services and North American operations, and has strengthened its position in Latin America as a leading information services provider and card processor. We have made substantial progress in Europe through 1999 and posted $1.7 million of operating income for the year."
During the quarter, the Company's stock repurchase program remained active, with the Company purchasing 1.9 million shares of stock for $44.6 million. Throughout 1999, Equifax spent $210.2 million repurchasing 6.9 million shares. Approximately $101 million remained available for repurchase as of December 31, 1999. Equifax has continued to repurchase its stock during the first quarter of 2000.
During the quarter, Equifax incurred Year 2000 readiness expenses of $2.5 million after-tax or about $.02 per share. For the year, Year 2000 readiness expense totaled $15.8 million after-tax or about $.11 per share.
BUSINESS RESULTS
Payment Services, which operates through Card Solutions and Check Solutions, increased revenue 10.1 percent to $190.8 million in the fourth quarter. The revenue increase in Payment Services was driven primarily by merchant and card processing in U.S. Card Solutions (which increased revenue in the mid-teens), and the new card processing operations in the United Kingdom. Check Solutions was also a significant contributor with a revenue increase of 16 percent as this business continues to grow both domestically and internationally. Brazil achieved outstanding revenue growth of over 20 percent in local currency; however, the exchange rate resulted in a decline in U.S. dollars.
Operating income for Payment Services of $41.5 million increased 7.6 percent due to the continued strong performance of both Card Solutions and Check Solutions. Growth was tempered by the investment in the start-up card processing operation in the United Kingdom and a reduction in software license sales between quarters. Going forward, Equifax is de-emphasizing card software sales as it grows its global card processing operations which can utilize this proprietary software and generate a recurring stream of revenue.
For the quarter, revenue in North American Information Services was $190.4 million versus $194.3 million in the fourth quarter of 1998, a decline due primarily to lower revenue within Risk Management Services and Mortgage Services. The revenue decline within Risk Management Services resulted mainly from the divestiture of certain business as well as the attrition of a customer earlier in the year that took its business in house. Revenue growth in U.S. Credit Information and Marketing Services benefited from strong performance in marketing services, tempered modestly by continued pricing pressures and lower volume growth. This was primarily due to the higher interest rate environment which impacted sales to the mortgage industry. Overall, revenue from this business increased about 4 percent. Revenue in Canadian operations increased versus fourth quarter 1998.
North American Information Services generated operating income of $72.4 million, increasing 7.2 percent versus fourth quarter 1998. Diligent expense containment contributed to this improvement. Excluding investments in Equifax Knowledge Engineering and Equifax Secure, this group's operating income growth was about 14 percent.
Revenue in Equifax Latin America (which does not include the Company's Payment Services operation in Brazil) was $30.5 million and operating income was $6.3 million for the fourth quarter of 1999. The information business in Brazil continues to perform well in local currency as revenue increased in the upper single digits. Revenue and operating income in Chile and Argentina declined versus 1998 due to an economic downturn and the lower exchange rate in Chile. Expectations are for an improving economy in Latin America in 2000.
Equifax Europe revenue was up 31.1 percent to $50.1 million versus $38.2 million in the fourth quarter 1998. This group reported a profit of $4.4 million for the quarter, as it has continued to improve its performance over the last 12 months, achieving a fourth quarter operating income margin of 8.8 percent. Equifax Europe has made substantial progress in improving its operations from fourth quarter 1998, and this group posted a modest profit for the year versus a loss in 1998. Revenue and profitability are expected to continue to improve in 2000, with an operating income margin in the mid to upper single digits.
General corporate expense for fourth quarter 1999 was higher than fourth quarter 1998 due primarily to higher expenses associated with Y2K preparedness and incentive plans.
OUTLOOK FOR YEAR 2000
"Equifax's primary goal is to build shareholder value through superior financial performance over the long term," Chapman said. "Our global presence, the improving trends and our operating strength enhance our competitiveness for continued strong financial performance. Our strategy is solid and consistent: geographic expansion; technological innovation, and value-added products delivered to multiple industries."
Kennedy reiterated Equifax's key initiatives for 2000. They include:
-- expanding Payment Services global card processing operations;
-- growing check services business with its superior risk management systems and innovative products;
-- increasing market share and expanding industries served in the information business -- specifically focusing on insurance, on-line brokerage, and middle market customers;
-- building our customer relationship management business with the key competitive advantages including data management and analytics;
-- enabling businesses to build trusted network environments that identify consumers online and secure transactions; and
-- providing consumers greater access to personal credit information to enable them to better understand and enhance their buying power.
"Equifax expects 2000 to be another record year for the Company with continued revenue and profit growth," Chapman said. "The Company expects earnings per share growth in the mid-teens range, with revenue growth in the upper single digits. With our customer base, new products, and strategic opportunities in new industries, we are confident this revenue growth is achievable. We expect first quarter earnings per share results to be flat due to the continuing investment in the ramp up of our global card processing operations, customer relationship management and e-commerce initiatives and the de-emphasis on software sales.
"Revenue from our newest businesses, Equifax Secure and Knowledge Engineering, is expected to grow substantially versus 1999. Within Equifax Secure, we just announced several new customers, including Chrysler Financial of DaimlerChrylser Financial Services (debis) North America and AutoSave.com, and Equifax Secure's unique authentication product is opening up opportunities in our core business as well.
"Our industry leadership position in the markets we serve enables us to leverage our people, technology and innovative products and services in the Year 2000. By continuing to grow our business and manage expenses as we have in the past, we will add incremental economic value for our shareholders over the long term."
Separately today, Equifax announced the acquisition of Procard, a card processing company in Chile, an agreement with Chrysler Financial and several key executive appointments.
Equifax (www.equifax.com), a worldwide leader in shaping global commerce, brings buyers and sellers together through its information management, transaction processing and knowledge-based businesses. Atlanta-based Equifax serves the financial services, retail, credit card, telecommunications/utilities, transportation, information technology and healthcare industries and government. Equifax adds knowledge, expertise, convenience and security to provide value-added solutions and processes for its customers wherever they do business, including the Internet and other networks. Equifax employs about 13,000 associates in 17 countries with sales in almost 50 and has $1.8 billion in revenue.
Statements in this press release that relate to Equifax's future plans, objectives, expectations, performance, events and the like are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. Future events, risks and uncertainties, individually or in the aggregate, could cause actual results to differ materially from those expressed or implied in these statements. Those factors could include changes in worldwide and U.S. economic conditions that materially impact consumer spending and consumer debt, changes in demand for the Company's products and services, risks associated with the integration of acquisitions and other investments, and other factors discussed in the "Forward-looking Information" section in the management's discussion and analysis included at Part II, Item 7 in the Company's annual report on Form 10-K for the year ended December 31, 1998, and in the "Year 2000 Information" section in the management's discussion and analysis included at Part I, Item 2 in the Company's report on Form 10-Q for the third quarter of 1999.
|
