Equifax Inc. reported Tuesday first quarter results driven by double digit revenue growth, and the strong performance of North American Information Services and Payment Services.
First quarter highlights include:
* Revenues for the quarter ending March 31, 1999, climbed 19.4% to $421.5 million compared to the prior year period.
* Operating income was $88.8 million versus $81.0 million in 1998.
* First quarter earnings per share were $.31.
Equifax president and CEO Thomas F. Chapman said, “First quarter 1999 results set the stage for a record 1999. We are pleased with the performance in Europe as well as their business outlook, with deals like the recently announced Marks and Spencer contract. Our Latin America strategy is working — the information business is performing well. We just announced the divestiture of our minority interest in Proceda, a non-core business in Brazil, on which Equifax will record a slight second quarter gain. We are encouraged by the business climate for both our processing and information businesses in Brazil. We continue to see solid financial performance from our domestic operations as well, both information services and transaction processing. Equifax Secure, the business that promotes privacy and security of Internet transactions, is positioning itself as the leading provider of authentication services. Looking forward to the rest of the year, we still expect full year earnings growth in the 17% range.”
During the quarter, the Company’s stock repurchase program remained active, with the Company purchasing 1.7 million shares of stock for $61 million. In January, the Board of Directors increased its share repurchase authorization by $250 million. Approximately $250 million remained available for repurchase as of March 31, 1999. Equifax has continued to repurchase its stock during the second quarter of 1999.
During the quarter, Equifax incurred Year 2000 readiness expenses of about $4 million after tax, or $.03 per share.
Payment Services, which operates globally through Card Services and Check Services, increased revenue 28.1% to $151.1 million in the first 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 new accounts, new customers and transactions processed in domestic Card Services, as well as the September 1998 acquisition of 59% of Unnisa, a card services business in Brazil, which contributed revenue of $13.0 million for the quarter. Operating income of $28.6 million increased 48.9% primarily as a result of license sales from Card Software, continued growth of the Card Services business and strong performance of Check Services in addition to continuing expense management within this operation. Just last week, Equifax announced the extension of its card processing contract with Card Services for Credit Unions (CSCU) through 2004. This contract has estimated revenue of $500 million over the five-year period.
For the quarter, revenue in North American Information Services of $192.0 million increased 6.5% versus first quarter last year. Revenue performance benefited from growth in U.S. Information Services, with increased sales from telecommunications and utilities industries, as well as marketing services. This group had operating income of $65.7 million, increasing 6.2% versus first quarter 1998. Operating income growth in North American Information Services was in the low double digits, excluding investments in Knowledge Engineering and Equifax Secure, the business that enhances the security and privacy of Internet transactions.
Revenue in Equifax Latin America (which does not include the Company’s Payment Services operation in Brazil) was $29.9 million for the first quarter, with much of the growth from the recent acquisition of SCI in Brazil, which contributed revenue of $13.7 million. Operating income of $4.2 million in the first quarter of 1999 was comparable to last year. The overall performance of the information business in Brazil exceeded expectations in local currency as Equifax is successfully integrating and managing the operations of this new acquisition. Despite the economic volatility in Latin America, efficient expense management has helped contribute to these results.
Equifax Europe revenue was $46.1 million versus $36.7 million in first quarter 1998. This group reported a loss of $1.7 million for the quarter, a significant improvement from the loss in the fourth quarter 1998. Equifax is making substantial progress in lowering the expense base in the U.K. and expects continued improvement in the second quarter. Last month, Equifax announced its biggest ever U.K. marketing contract — a three-year project with Marks and Spencer to build a unique marketing database for that company, in alliance with Claritas.
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 (NYSE: EFX) 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. Entering its second century in business, Equifax employs more than 14,000 associates in 18 countries with sales in nearly 50 and has more than $1.6 billion in revenue.
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