As used herein, the terms Equifax, the Company, we, our and us refer toEquifax Inc. , aGeorgia corporation, and its consolidated subsidiaries as a combined entity, except where it is clear that the terms mean onlyEquifax Inc. All references to earnings per share data in Management's Discussion and Analysis, or MD&A, are to diluted earnings per share, or EPS, unless otherwise noted. Diluted EPS is calculated to reflect the potential dilution that would occur if stock options or other contracts to issue common stock were exercised and resulted in additional common shares outstanding.
BUSINESS OVERVIEW
Equifax Inc. is a global data, analytics and technology company. We provide information solutions and human resources business process outsourcing services for businesses, governments and consumers. We have a large and diversified group of clients, including financial institutions, corporations, governments and individuals. Our services are based on comprehensive databases of consumer and business information derived from numerous sources including credit, financial assets, telecommunications and utility payments, employment, income, demographic and marketing data. We use advanced statistical techniques, machine learning and proprietary software tools to analyze available data to create customized insights, decision-making solutions and processing services for our clients. We also provide information, technology and services to support debt collections and recovery management. Additionally, we are a leading provider of payroll-related and human 25 -------------------------------------------------------------------------------- resource management business process outsourcing services inthe United States of America , orU.S. For consumers, we provide products and services to help people understand, manage and protect their personal information and make more informed financial decisions. We currently operate in four global regions:North America (U.S. andCanada ),Asia Pacific (Australia ,New Zealand andIndia ),Europe (theUnited Kingdom , orU.K. ,Spain andPortugal ) andLatin America (Argentina ,Chile ,Costa Rica ,Ecuador ,El Salvador ,Honduras ,Mexico ,Paraguay ,Peru andUruguay ). We maintain support operations in theRepublic of Ireland ,Chile ,Costa Rica andIndia . We also offer Equifax branded credit services inRussia through a joint venture, have investments in consumer and/or commercial credit information companies through joint ventures inCambodia ,Malaysia ,Singapore and theUnited Arab Emirates , and have an investment in a consumer and commercial credit information company inBrazil . Recent Events and Company Outlook As further described in our 2019 Form 10-K, we operate inthe United States , which represented 73% of our revenue in 2019, and internationally in 24 countries. Our products and services span a wide variety of vertical markets including financial services, mortgage, federal, state and local governments, automotive, telecommunications and many others. OnMarch 11, 2020 , theWorld Health Organization designated the novel coronavirus disease ("COVID-19") as a global pandemic. The impact of COVID-19 and related actions to attempt to control its spread began to impact our consolidated operating results inMarch 2020 . The impact on the operating results in each country in which we operate differed based on the conditions and the vertical markets we serve in that country. Inthe United States , consolidated revenue grew during the three months endedSeptember 30, 2020 , compared to the three months endedSeptember 30, 2019 , reflecting very strong mortgage market related revenue in both USIS and Workforce Solutions, and, to a lesser degree than we experienced in the three months endedJune 30, 2020 , higher revenue growth in our Workforce Solutions unemployment claims management business. However, in theU.S. , we experienced year-over-year revenue declines in most other vertical markets including commercial, financial services and telecommunications. Internationally, all countries in which we operate experienced revenue declines, across most vertical markets. The year-over-year reductions in countries and vertical markets referenced were most pronounced in the second quarter. Although most countries continue to show year-over-year declines, performance in the third quarter of 2020 has improved from the levels seen in the second quarter. Due to the strong revenue growth in theU.S. , total Equifax consolidated operating results improved in the third quarter of 2020 compared to both the first and second quarters of 2020 and the third quarter of 2019. We are unable to determine the severity or duration of the impact of the COVID-19 pandemic on Equifax or how the impact on the individual markets in the countries we serve will change with time. Although consolidated revenue has grown during the first nine months of 2020 when compared to 2019, due to the uncertain effects of the global economy caused by the impact of COVID-19, there can be no assurances that revenues will continue to grow in the fourth quarter of 2020. We expect that the global COVID-19 pandemic will continue to adversely impact our business and results of operations. During this uncertain time, our critical priorities are: (i)the health and safety of our employees and their families; (ii)providing support to consumers; (iii)helping our customers execute their changing business plans by providing innovative solutions combining our unique data assets and leading analytical and technology capabilities; and (iv)executing on our EFX2020 cloud technology, data and security transformation per our previously stated plans. In the first quarter of 2020, we executed on our business continuity plans and formed a crisis management team to address the challenges related to the ongoing COVID-19 pandemic. In March andApril 2020 , our employees worked from home in each country where we operate, with only essential employees in customer support and data center operations working on site at our facilities. Beginning in May, in jurisdictions where local restrictions implemented to prevent the further spread of the virus were lifted, our employees began to return to their assigned offices, with limits placed on the number of employees on site at one time. For employees working at our offices and facilities, we have instituted social distancing protocols, increased the level of cleaning and sanitizing in those facilities and undertaken other actions to make these sites safer. We have also substantially reduced employee travel to only essential business needs. As part of our business continuity plans, we are generally following the requirements and protocols published by theU.S. Centers for Disease Control andthe World Health Organization , and state and local governments. If public health authorities dictate further measures to limit further spread of the 26 -------------------------------------------------------------------------------- virus, we may need to reinstate our business continuity plans in certain countries or regions in which we operate. As of the date of this filing, we do not believe our work from home and return to office protocol have materially adversely impacted our internal controls, financial reporting systems or our operations. Our data and analytics, product and sales teams are focused on how to refine existing products and services, as well as generate new products and services, to meet changing needs of our customer in this environment. Our technology teams continue to execute on our EFX2020 cloud technology, data and security transformation, including the continued migration of our technology to cloud native environments. To date, the change in working environment has not caused material disruptions in the execution of these plans. As a response to the ongoing COVID-19 pandemic, we have implemented plans to manage our costs. We have significantly limited the addition of new employees and third party contracted services, eliminated all travel except where necessary to meet customer or regulatory needs, and acted to limit discretionary spending. To the extent the business disruption continues for an extended period, additional cost management actions will be considered. Recovery from the COVID-19 induced recession remains highly uncertain and may require several years to return to economic levels experienced prior to the pandemic and may affect certain markets or regions we serve differently. Any future asset impairment charges, increase in allowance for doubtful accounts, or restructuring charges could be more likely and will be dependent on the severity and duration of this crisis. AtSeptember 30, 2020 , we had approximately$1.5 billion in cash and$1.3 billion available to borrow under our revolving credit facility that matures inSeptember 2023 and receivables funding facility. In the second quarter of 2020, we amended our revolving credit facility to increase the maximum leverage ratio through 2021 to provide us with additional financial flexibility. In light of the evolving health, social, economic and business environment, governmental regulations or mandates, and business disruptions that could occur, the potential impact that COVID-19 could have on our financial condition and operating results remains highly uncertain. For more information, see "Item 1A. Risk Factors-Our business has been and will continue to be negatively impacted by the recent COVID-19 outbreak," in ourJune 30, 2020 Form 10-Q. 2017 Cybersecurity Incident Litigation, Claims and Government Investigations. As a result of the 2017 cybersecurity incident, we are subject to a significant number of proceedings and investigations as described in Part II, "Item 1. Legal Proceedings" in this Form 10-Q. In 2019, we recorded expenses, net of insurance recoveries, of$800.9 million in other current liabilities and selling, general, and administrative expenses in our Consolidated Balance Sheets and Statements of Income (Loss), respectively, exclusive of our legal and professional services expenses. The amount accrued represents our best estimate of the liability related to these matters. The Company will continue to evaluate information as it becomes known and adjust accruals for new information and further developments in accordance with ASC 450-20-25. The ultimate amount paid on these actions, claims and investigations in excess of the amount already accrued could be material to the Company's consolidated financial condition, results of operations, or cash flows in future periods. Future Costs. We are currently executing substantial initiatives in security and consumer support, and a company-wide transformation of our technology infrastructure, which we refer to as our technology transformation, and incurred substantial increased expenses and capital expenditures in 2019 and the first nine month of 2020 related to these initiatives. We expect to continue to incur significant expenses and capital expenditures in the remainder of 2020 related to these initiatives, at similar levels as those incurred in 2019. We incurred significant legal and professional services expenses related to the lawsuits, claims and government investigations to which we were a party in 2019, and expect to continue to incur these expenses until all matters are fully resolved. However, due to the settlement of all significant matters in theU.S. in 2019, the level of legal and professional service expenses related to these matters was significantly lower in the first nine months of 2020 compared to the same period in 2019, and we expect that these expenses will continue to be significantly lower in the remainder of 2020.
We will recognize the expenses and capital expenditures referenced herein as they are incurred.
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Segment and Geographic Information
Segments. The USIS segment, the largest of our four segments, consists of three service lines: Online Information Solutions; Mortgage Solutions; and Financial Marketing Services. Online Information Solutions and Mortgage Solutions revenue is principally transaction-based and is derived from our sales of products such as consumer and commercial credit reporting and scoring, identity management, fraud detection and modeling services. USIS also markets certain decisioning software services, which facilitate and automate a variety of consumer and commercial credit-oriented decisions. Financial Marketing Services revenue is principally project and subscription based and is derived from our sales of batch credit and consumer wealth information such as those that assist clients in acquiring new customers, cross selling to existing customers and managing portfolio risk. The Workforce Solutions segment consists of the Verification Services and Employer Services business lines. Verification Services revenue is transaction-based and is derived primarily from employment and income verification. Employer Services revenues are derived from our provision of certain human resources business process outsourcing services that include both transaction and subscription based product offerings. These services include unemployment claims management, employment-based tax credit services and other complementary employment-based transaction services. The International segment consists ofAsia Pacific ,Europe ,Latin America andCanada .Canada's services are similar to our USIS offerings, whileAsia Pacific ,Europe andLatin America are made up of varying mixes of service lines that are generally in our USIS segment. We also provide information and technology services to support lenders and other creditors in the collections and recovery management process. Global Consumer Solutions revenue is both transaction and subscription based and is derived from the sale of credit monitoring and identity theft protection products, which we deliver electronically to consumers primarily via the internet in theU.S. ,Canada , and theU.K. We also sell consumer and credit information to resellerswho combine our information with other information to provide direct-to-consumer monitoring, reports and scores. Geographic Information. We currently have operations in the following countries:Argentina ,Australia ,Canada ,Chile ,Costa Rica ,Ecuador ,El Salvador ,Honduras ,India ,Mexico ,New Zealand ,Paraguay ,Peru ,Portugal , theRepublic of Ireland ,Spain , theU.K. ,Uruguay and theU.S. We also offer Equifax branded credit services inRussia through a joint venture, have investments in consumer and/or commercial credit information companies through joint ventures inCambodia ,Malaysia ,Singapore , and theUnited Arab Emirates , have an investment in a consumer and commercial credit information company inBrazil , and have an investment in an identity authentication company inCanada . Approximately 78% and 72% of our revenue was generated in theU.S. during the three months endedSeptember 30, 2020 and 2019, respectively. Approximately 78% and 72% of our revenue was generated in theU.S. during the nine months endedSeptember 30, 2020 and 2019, respectively. 28 -------------------------------------------------------------------------------- Key Performance Indicators. Management focuses on a variety of key indicators to monitor operating and financial performance. These performance indicators include measurements of operating revenue, change in operating revenue, operating income, operating margin, net income, diluted earnings per share, cash provided by operating activities and capital expenditures. The key performance indicators for the three and nine months endedSeptember 30, 2020 and 2019 were as follows: Key Performance Indicators Nine months ended Three Months Ended September 30, September 30, 2020 2019 2020 2019 (In millions, except per (In millions, except per share data) share data) Operating revenue$ 1,068.3 $ 875.7 $ 3,009.1 $ 2,601.8 Operating revenue change 22 % 5 % 16 % 1 % Operating income (loss) $ 204.4 $
121.6
19.1 % 13.9 % 16.9 % (14.7) % Net income (loss) attributable to Equifax $ 224.2 $
81.1
Diluted earnings (loss) per share $ 1.82$ 0.66 $ 3.53 $ (3.35) Cash provided by (used in) operating activities $ 367.0 $
(164.9)
$ (112.3) $
(87.8)
*Amounts include accruals for capital expenditures.
Operational and Financial Highlights
•We did not repurchase shares of our common stock during the first nine months
of 2020. At
•We paid out
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