September 13, 2011

Equifax Inc. 

 

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India 

On December 23, 2009, Equifax formed a joint venture, Equifax Credit Information Services Private 

Limited, or ECIS, to provide a broad range of credit data and information solutions in India. According to the 

terms of the transaction, EFX acquired a 49% equity interest in ECIS for $5.2 million. India boasts the world’s 

fastest growing middle class economy presenting the Company with an attractive future growth opportunity. 

Additional Growth Drivers/Opportunities 

In addition to new product introductions, strategic acquisitions/investments of unique data assets and 

emerging markets growth we would highlight a couple of other drivers that are likely to benefit Equifax in the 

coming years.  

Key Client Program 

During 2010, Equifax launched its “Key Client Program” initiative, which entails employees from the 

Company’s multiple divisions working closely with its large financial services clients to provide an array of 

solutions. Through the initiative, EFX leveraged its unique current wealth and Income Data from IXI and TALX 

into the development of the industry’s first set of “ability-to-pay” solutions based on actual income and asset 

data. These solutions were adopted by three of the top four credit card companies during 2010. For a majority 

of its key clients, over 50% of the revenue is from product offerings that are unique to Equifax when compared 

to its primary credit reporting competitors. We believe this demonstrates the Company’s solid competitive 

position and gives credence to the Company’s strategy of integrating its unique data assets and capabilities in 

helping its customers solve new problems while allowing EFX to pursue new growth opportunities. 

Increased Demand from Non-Traditional User of Credit Data 

While Equifax’s data has traditionally helped companies make decisions directly related to credit in the 

financial sector, we believe that the Company’s data will be increasingly used by companies outside of the 

traditional financial lending sector. Healthcare companies are utilizing credit data in today’s high deductible and 

high uninsured environment. Meanwhile, investors are using credit data to evaluate securitized loan portfolios 

and for profit education companies are able to use the data to help them reduce loan defaults.  

Equifax’s recent partnership with Internet data provider comScore highlights another potential non-

traditional user of credit data. As part of the partnership, comScore will be using EFX’s data (IXI Database) and 

technology to develop new co-branded solutions designed to optimize ad placement for the financial services 

sector to more effectively reach their targeted audiences based on estimated income, assets, discretionary 

spending or ability to pay. We believe that the Company’s databases could become increasingly valuable for 

online advertising/media companies providing a new revenue stream for the Company.  

Expansion into Adjacent Markets - Leveraging the Company’s Credit Database 

In October 2010, Equifax acquired Anakam, a global leader in multi-factor authentication, identity 

proofing and verification technologies, for $64.3 million. In our view, the Anakam acquisition provides Equifax 

with the opportunity to develop new sources of authentication solutions that leverage the Company’s credit and 

income databases. Anakam has developed unique authentication tools that eliminate the need for costly hard 

tokens or the downloading of software. The combination of the Company’s databases with Anakam’s 

technology could take the authentication process to another level by including data unique to an individual’s 

credit file and include questions such as “What was the make/model of the last car you purchased or leased?”. 

We believe the transaction could help further diversify the Company’s revenue outside of the financial services 

industry given Anakam’s large exposure to the Healthcare and Government industries.  

Outlook 

Equifax’s long-term goal for revenue growth is in the 6% to 9% range. The following chart illustrates 

the components of the Company’s revenue growth expectations.  

 

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Equifax Inc. 

 

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Equifax Long Term Financial Model 

 

Source: Company presentation, September 2011 

 

The Company expects operating margins to be between 25% and 27%. It should be noted that the 

prior outlook for margins were in the 24%-26% range, but this assumed consolidation of the Brazil operations. 

With the recent merger of its Brazil business, which resulted in the Company receiving an equity stake, the 

Company expects to receive a ~100 bps margin improvement going forward. Equifax believes that margins will 

reach the lower end of its range during the fourth quarter of 2011. In terms of earnings per share growth, the 

Company expects that adjusted EPS should to grow 1%-3% faster than its sale growth reflecting operating and 

financial leverage. Further, dividends are expected to add 1% to 2% annually to shareholder return.  

Second Half 2001 Outlook 

Equifax stated on its 2Q11 quarterly earnings call that it is confident in 6%-9% revenue growth for the 

remainder of the year, despite challenges posed by the U.S. economy. In addition, the Company faces difficult 

comps in its mortgage business in the second half, suggesting strong underlying improvement in the core 

business (non-mortgage related). At the same time, overall Company margins are expected to expand driven 

by improvement in USCIS, which is expected to show margin improvement beginning in the 2

nd

 half of 2011.  

In a rare move during the Company’s 2Q11 earnings call, the Company issued an outlook for its fourth 

quarter stating that it expects 4Q11 revenue growth to be in the upper half of its 6%-9% range. In addition, 

Equifax said that margins will expand to 25.0%-25.5% range in 4Q11 (4Q10 margins were 22.8%).  

Balance Sheet and Financial Strength – Debt Reduction and Liquidity 

Equifax’s $1.4 billion acquisition of TALX in 2007 (75% stock; 25% cash; + assumption of 

~$200 million of debt) increased the Company’s debt load by ~$500 million. In addition, Equifax instituted a 

major share buyback in conjunction with the TALX acquisition and repurchased 17.9 million shares for 

$718 million in 2007 at an average cost of ~$40 a share. Since the TALX acquisition, EFX’s total debt 

has declined by $406 million while the Company’s leverage ratio has declined to 1.63x as of June 2011  

from 2.3x in 2007.  

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