Transunion · NYSE:TRU
Transunion — Q1 2020 Earnings Presentation
26 slides from Transunion's earnings presentation, Apr 28, 2020
Slide 1: TransUnion First Quarter 2020 Earnings
v Exhibit 99.2 v v TransUnion First Quarter 2020 Earnings Chris Cartwright, President and CEO Todd Cello, CFO
Slide 2: Forward-Looking Statement
Forward-Looking Statement This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of TransUnion’s management and are subject to significant risks and uncertain
Slide 3: Focus on welfare and business continuity
• Focused on the welfare of our associates, customers, consumers and communities • Transitioned to work from home globally • Operating all aspects of our business successfully • Appreciate decisive actions of legislators and regulators © 2020 Trans Union LLC All Rights Reserved | 3
Slide 4: COVID-19 Situation Update
COVID-19 Situation Update • Tracking well ahead of guidance prior to mid-March • Experienced declines in economic activity, curtailed lending and job losses as a First Quarter result of shelter in place policies across our markets 2019 Impact • Delivered strong first quarter results despite downturn
Slide 5: Agenda
1 Current transaction trends 2 Downturn Playbook 3 Strategy and portfolio strengths 4 Balance sheet and liquidity position 5 Second quarter scenario-based outlook © 2020 Trans Union LLC All Rights Reserved | 5
Slide 6: U.S. Markets – Financial Services Trend
U.S. Markets – Financial Services Trend Online Credit Report Unit Volumes Total U.S. Markets Financial Services Volume • Prior to mid-March, Financial Services was performing very well (11%) • Shelter in place policies caused dramatic volume reductions • Volumes stabilized in recent weeks January Fe
Slide 7: U.S. Markets – Financial Services End-Market Trends
U.S. Markets – Financial Services End-Market Trends Online Credit Report Unit Volumes Mortgage Auto (11%) +38% January February March April(1) January February March April(1) Consumer Lending Card and Banking (29%) (13%) January February March April(1) January February March April(1) (1) Data shown
Slide 8: Healthcare Vertical Trends
Healthcare Vertical Trends Our solutions reduce provider risk and increase cash flow • Front-end solutions: insurance eligibility checks, identity screens and payment estimation ─ Patient volumes declining with focus on COVID-19 and deferral of elective and preventative care • Back-end solutions: id
Slide 9: Insurance Vertical Trends
Insurance Vertical Trends Provide insurers with marketing and underwriting solutions, analytics and investigative tools for claims • Insurers continue to service customers and underwrite new policies; less impacted given consistent demand • Underwriting dropped in mid-March due to decline in shoppin
Slide 10: Other U.S. Markets Vertical Trends
Other U.S. Markets Vertical Trends Vertical What We Do Current Trends TransUnion Outlook Severe volume declines due to Critical data for Softness continues until social and collections hiatus and Collections third-party collections policy-driven moratoriums expire work from home challenges Public Ba
Slide 11: Consumer Interactive Trends
Consumer Interactive Trends Consumers recognize value of credit and identity protection, credit monitoring and related financial education tools • Direct channel: ─ Modest negative impact to subscriber base ─ Focused marketing to maximize acquisition and retention • Indirect channel: ─ Indirect part
Slide 12: International Trends
International Trends Country or Revenue Portfolio Diversification Current Trends Region Contribution (Beyond Financial Services) 7% of Total TU Fraud solutions, government, Markets under stress; U.K. (31% of International) gaming, affordability suite strong fraud solution volumes 4% of Total TU Frau
Slide 13: Downturn Playbook: Marketplace Actions
Downturn Playbook: Marketplace Actions Phase I: Phase II: Phase III: Immediate Response Initial Recovery New Normal Goals Engage with our customers and Expand customer engagement Proceed with our long-term serve their immediate needs with and create new solutions to strategy, updated to reflect tail
Slide 14: Downturn Playbook: Cost Mitigation and Investment Prioritization
Downturn Playbook: Cost Mitigation and Investment Prioritization Managing costs consistent with softer market conditions • Near-term cost actions: ─ Variable costs offset a portion of volume declines (e.g., royalties and variable compensation) ─ Cancelled future T&E, internal meetings and client eve
Slide 15: TransUnion's Unique Market Position and Approach
TransUnion’s Unique Market Position and Approach Innovator / attacker positions across our markets Replicable enterprise growth playbook Powerful data assets Industry-leading technology stack Culture of customer focus, accountability, performance Sound financial management © 2020 Trans Union LLC All
Slide 16: Strong Liquidity Position and Commitment to Prudently Manage our Balance Sheet
Strong Liquidity Position and Commitment to Prudently Manage our Balance Sheet Liquidity Leverage $306M Cash on hand $3.34B Total net debt $300M Undrawn revolver capacity $1.08B TTM Adjusted EBITDA $606M Total liquidity 3.1x Reported net leverage ratio Going forward, prioritizing cash to: Only one f
Slide 17: Consolidated Q1 2020 Financial Highlights
Year-over-Year Change Adjusted Revenue 10% Constant Currency Adjusted Revenue 11% Consolidated Q1 2020 Organic Adjusted Revenue 10% Highlights Organic Constant Currency Adjusted Revenue 11% Adjusted EBITDA 10% Constant Currency Adjusted EBITDA 11% Organic Constant Currency Adjusted EBITDA 11% Adjust
Slide 18: U.S. Markets Q1 2020 Year-over-Year Highlights
Inorganic Organic Constant Reported FX Impact Impact Currency U.S. Markets Adjusted 14% — (1)% 14% Q1 2020 Revenue Financial 22% — — 22% Year-over-Year Services Financial Emerging 6% — (1)% 5% Highlights Verticals Adjusted 21% — — 21% EBITDA Note: Rows may not foot due to rounding. © 2020 Trans Unio
Slide 19: International Q1 2020 Year-over-Year Highlights
Organic Organic CC Inorganic Reported FX Impact Constant ex. Recipero Impact Currency Disposition Adjusted 5% +4% — 9% 10% International Revenue Q1 2020 Canada 15% +1% — 16% — Latin (4)% +10% — 6% — Year-over-Year America Financial U.K. 6% +1% — 7% 10% Highlights Africa (5)% +9% — 4% — India 11% +3%
Slide 20: Consumer Interactive Q1 2020 Year-over-Year Highlights
Consumer Inorganic Organic Constant Reported FX Impact Interactive Impact Currency Adjusted Q1 2020 3% — — 3% Revenue Year-over-Year Adjusted (5)% — — (5)% Financial EBITDA Highlights © 2020 Trans Union LLC All Rights Reserved | 20
Slide 21: Suspending Full Year 2020 Guidance
• The global spread and unprecedented impact of COVID-19 is complex and rapidly-evolving. Given the considerable uncertainty across all our geographic Suspending and vertical markets, at this time we have suspended Full Year full year guidance. 2020 Guidance • We will continue to assess this decisio
Slide 22: Full Year 2020 Outlook – Other Items
Prior Outlook Updated Outlook Adjusted Tax Rate: 25.5% Lower Adjusted Tax Rate Full Year 2020 Outlook Total D&A: ~$375M Lower Total D&A • D&A ex. step-up and • D&A ex. step-up and – Other Items subsequent M&A: ~$180M subsequent M&A also lower Net Interest Exp.: ~$140M Lower Net Interest Expense CapE
Slide 23: Second Quarter 2020 Scenario-based Outlook: Base Case
Second Quarter 2020 Scenario-based Outlook Market Potential Balance Sheet Assumptions Financial Outcome Implications • Adjusted Revenue: decline 13% to 18% ─ Includes 1 point of FX headwind ─ U.S. Markets: mid-teens percent decline ─ International: low-twenties percent decline Base Current trends •
Slide 24: Second Quarter 2020 Scenario-based Outlook: Upside and Downside Cases
Second Quarter 2020 Scenario-based Outlook Market Potential Balance Sheet Assumptions Financial Outcome Implications • Adjusted Revenue: decline less than 10% Upside Earlier, albeit slow, • Cash balance builds slightly start to recovery • Adjusted EBITDA: decline less than 25% Case in May or June 20
Slide 25: Closing summary
• Provided comprehensive, transparent view of our business and markets • Executing plans to proactively address current situation • Expect portfolio and strategy to remain intact • Prioritizing welfare of associates and broader communities © 2020 Trans Union LLC All Rights Reserved | 25
Slide 26: © 2020 Trans Union LLC All Rights Reserved | 26
© 2020 Trans Union LLC All Rights Reserved | 26