EQUIFAX POSTS RECORD YEAR END RESULTS FOR 1998
ATLANTA, January 21, 1999 -- -- Equifax Inc. today reported fourth quarter and year end results driven by double digit revenue growth, and the strong performance of North American Information Services, Payment Services and its Latin American operations. For the year,
Revenue of $1.62 billion increased 18.7% versus 1997.
Operating income from continuing operations of $365.7 million increased 12.9% over the prior year (before an unusual charge in 1997).
Earnings per share from continuing operations (before a non-recurring gain, unusual charge and accounting change in 1997), rose from $1.24 in 1997 to $1.34 in 1998 or 8.1%.
Equifax had previously announced that results would be lower than analysts' earlier estimates due to the fourth quarter performance of its European operations, but today's announced results are in line with the revised estimates which were established.
Fourth quarter highlights which contributed to the Company's record 1998 results include:
Revenues for the quarter ending December 31, 1998, climbed 22.4% to $449.0 million compared to the prior year period.
Operating income from continuing operations was $92.8 million versus $94.9 million in 1997 (before an unusual charge in 1997).
Fourth quarter earnings per share were $.31.
Equifax President and CEO Thomas F. Chapman said, "Equifax just completed another record year in 1998. We have laid the foundation for two new strategic businesses: our knowledge engineering business, which provides even more value-added expertise for our customers globally; and our new e-commerce business to authenticate consumer identity, secure applications and manage digital certificates. Equifax has continued to post strong growth in its North American and global Payment Services operations, and we have cemented our position in Latin America as the leading information services provider and a leader in card processing." Chapman noted that "Looking forward to 1999 and our second century in business, our positioning has never been better to capitalize on global opportunities, and our prospects for domestic growth remain strong as well."
During the quarter, the Company's stock repurchase program remained active, with the Company purchasing 1.7 million shares of stock for $64 million. Throughout 1998, Equifax spent $162 million repurchasing 4.6 million shares. Approximately $61 million remained available for repurchase as of December 31, 1998. Equifax has continued to repurchase its stock during the first quarter of 1999.
During the quarter, Equifax incurred Year 2000 readiness expenses of $5.1 million after-tax or about $.04 per share. For the year, Year 2000 readiness expense totaled $13.7 million after-tax or about $.10 per share. The company estimates that Year 2000 expenses for 1999 will be $14 million after-tax or about $.10 per share.
1999 OUTLOOK
"Equifax's primary goal is to build long-term shareholder value through superior financial performance. Our financial measurement system is based on economic value added, and we will continue to align the company's interests with our shareholders. Our strategy is simple, yet effective as we focus on geography, technological deployment, and value-added products delivered to multiple industries," said Mr. Chapman.
Equifax expects 1999 to be another strong performing year for the Company with continued revenue and profit growth. Chapman said, "Like most global companies, we are cautiously approaching 1999, given the challenging global economies and the increasing concentration on Year 2000 readiness. Also, the recent devaluation of the Brazilian real is expected to significantly impact the revenue recorded in U.S. dollars from Brazil in 1999, but will not materially impact Equifax's 1999 earnings results. With the recent currency devaluation in Brazil, the Company expects earnings per share growth in the 17% range, with revenue growth in the 15% range. First quarter earnings results are expected to be flat year over year, and increasing thereafter.
"We are well positioned for the new millennium with our industry leadership positions in the markets we serve. 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," Mr. Chapman added.
BUSINESS RESULTS
Payment Services, which operates through Card Services and Check Services, increased revenue 25.6% to $159.6 million in the fourth quarter. Card Services is the leading provider of third party full-service processing solutions to credit unions and independent banks in the U.S. The revenue increase in Payment Services was led primarily by growth in Card Services, with an increase in card and merchant processing, as well as the acquisition of 59% of Unnisa, a card services business in Brazil which contributed revenue of $18.9 million for the quarter. Operating income of $36.5 million increased 28.5% primarily as a result of the substantial operating leverage from the integration of the acquisition of CUNA Service Group, Inc. in late 1996, as well as continued growth of the Card Services business and strong performance of Check Services.
For the quarter, revenue in North American Information Services of $195.4 million increased 11.2% versus fourth quarter last year. Revenue performance benefited from growth in U.S. Information Services, with increased sales from the finance, telecommunications and utilities industries as well as growth in risk management (Equifax's unique outsourcing business) and real estate related services. This group continued to demonstrate operating leverage with operating income of $69.8 million, increasing 18.6% versus fourth quarter 1997.
Revenue in Equifax Latin America (which does not include the Company's Payment Services operation in Brazil) was $40.8 million for the fourth quarter, with much of the growth from the consolidation of results in Argentina due to our 1997 year-end acquisition of a controlling interest in Veraz, as well as the recent acquisition of SCI in Brazil, which contributed revenue of $22.9 million. Operating income was $6.8 million in the fourth quarter of 1998 versus $4.3 million one year ago.
Equifax Europe revenue was $50.7 million versus $51.3 million in fourth quarter 1997. This group reported a loss of $15.4 million for the quarter. The significant loss versus prior year is the result of substantially lower revenues than expected and an expense structure which is not commensurate with the adjusted revenue base. During the quarter, Equifax also wrote off its investment in a U.K. start-up joint venture and increased its provision for bad debts. Rich Crutchfield, an experienced Equifax manager, has been named Group Executive in charge of Europe. Expense management and continued sales growth are the two primary objectives for 1999 in Europe. Equifax Europe is expected to post solid revenue growth in 1999 and return to profitability.
EQUIFAX (NYSE: EFX) is a worldwide leader in shaping global commerce by bringing buyers and sellers together through its information, transaction processing, consulting and knowledge-based businesses. Equifax serves the banking, financial, retail, credit card, telecommunications/utilities, transportation and healthcare industries, e-commerce and government. Founded in 1899, Atlanta-based Equifax today has 14,000 employees in 18 countries and sales in more than 45 countries. Revenues for year end December 31, 1998, were more than $1.6 billion. For more Equifax information, visit the company's Internet web site at www.equifax.com.
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