Equifax, Inc. · NYSE:EFX
Equifax — Investor Day (December 2012)
83 slides from Equifax's investor day presentation, December 2012
Slide 1: © Equifax Confidential and Proprietary
© Equifax Confidential and Proprietary
Slide 2: Forward Looking Statements
Forward Looking Statements As usual, we will make statements during the presentation which are forward looking. Our 10-Ks, 10-Qs and other SEC documents outline the risks associated with these statements, and we encourage you to review them. We also incorporate certain non-GAAP financial measures in
Slide 3: Agenda
Agenda Introduction Jeff Dodge Executing on Our Strategic Plan Accelerates Growth Rick Smith Driving Growth in U.S. Consumer Information Solutions Rudy Ploder Premier Provider of Small Business Insights Alex Gonzalez Superior Insights for Our Partners Dann Adams Break The Consumers’ Most Trusted Par
Slide 4: Executing on Our Strategic Plan Accelerates Growth
EXECUTING ON OUR STRATEGIC PLAN ACCELERATES GROWTH Rick Smith, Chairman and Chief Executive Officer © Equifax Confidential and Proprietary
Slide 5: Strategic Focus Over Past Few Years
Strategic Focus Over Past Few Years Expand and broaden our portfolio of unique data assets Develop discipline and executional excellence in New Product Innovation (NPI) Build expertise and dedicate resources to expand our served markets Ensure strong financial and operational discipline with M&A ini
Slide 6: Being a Leader in Unique Data Assets Fuels Innovation
Being a Leader in Unique Data Assets Fuels Innovation We have shifted from primarily 2005 a credit reporting company in 2005 to a premier information Positive Negative solutions provider Telephone & Utility Telephone & Utility Exchange Exchange Identification Property data and linking data Worldwide
Slide 7: NPI Activity is Diverse and Deeply Imbedded in Business Unit Strategies
NPI Activity is Diverse and Deeply Imbedded in Business Unit Strategies 2011 New Product Innovation mix We are delivering 3% incremental annual growth from New Product Innovation © Equifax Confidential and Proprietary 7
Slide 8: Expanding Our Served Markets Drives Revenue Growth
Expanding Our Served Markets Drives Revenue Growth Complementary drivers of revenue growth Expansion of markets served Mortgage Insurance Capital Markets HR Solutions International Telco Automotive Market penetration through dedicated resources, development of expertise and product innovation © Equi
Slide 9: Disciplined Approach to Strategic Acquisitions
Disciplined Approach to Strategic Acquisitions M&A activity encompasses a balanced portfolio addressing short, medium and long-term growth opportunities M&A activity (2006–2011) Strategic acquisition focus Unique data Geographic expansion Analytics Decisioning technology Scaling existing operations
Slide 10: Operational Enablers Provide Leverage
Operational Enablers Provide Leverage Enterprise growth initiatives Cost optimization Project management Sourcing efficiencies Organizational leverage Real estate rationalization and optimization Execution Execution discipline PMO – standard tools/processes, training and development Process improvem
Slide 11: Building a World Class Management Team
Building a World Class Management Team Recruit and develop exceptional management talent to drive superior and consistent execution of strategic objectives Recruiting top talent Adding top talent in key positions to expand market penetration and develop innovative capabilities Developing the Broaden
Slide 12: Execution of Strategy Delivers Solid Growth…
Execution of Strategy Delivers Solid Growth… *Revenue ($ millions), excluding Brazil and divested operations ** YTD actual + Q4 consensus © Equifax Confidential and Proprietary 12
Slide 13: … and Steady Growth Drives Attractive EBITDA Margin
… and Steady Growth Drives Attractive EBITDA Margin Equifax continues to deliver outstanding EBITDA* margins, ranking in the top quartile of S&P 500 companies Top quartile *Excludes unusual items and discontinued operations © Equifax Confidential and Proprietary 13
Slide 14: The Road Ahead
The Road Ahead Economic growth will be at best a modest driver of Equifax growth Economic We are investing in segments experiencing economic growth Our changing regulatory environment potentially provides growth Regulatory opportunities and challenges Competitive Emerging competitors and most tradit
Slide 15: Trends Reshaping the Equifax Environment
Trends Reshaping the Equifax Environment Analytics to drive insight from data New data for traditional decisions Analytics and Big Data Data replaces Reduced costs Cloud estimates Device and and open to innovate machine data Devices as proxies development Rapid deployment for people and updating Fin
Slide 16: Strategic Focus Over Next Few Years
Strategic Focus Over Next Few Years Equifax is accelerating investment in specific aspects of our core “pillars” to drive future growth Drive analytics- based innovation Expand international Extend across footprint Expand technology customer value chain Accelerate and Build on existing integration i
Slide 17: Expanding Existing Big Data Capabilities
Expanding Existing Big Data Capabilities We are expanding existing Big Data capabilities to support current Equifax businesses and to drive innovation and new growth > It’s still early. Most companies working to understand trends and benefits > Adoption occurring first in IT and marketing, but devel
Slide 18: Driving Analytics in Core Markets
Driving Analytics in Core Markets We are building on existing analytic capabilities to more rapidly innovate in the primary markets we serve today © Equifax Confidential and Proprietary 18
Slide 19: Example: Analytical Sandbox Combines Big Data and Analytics
Example: Analytical Sandbox Combines Big Data and Analytics © Equifax Confidential and Proprietary 19
Slide 20: Greater Expansion in Fraud
Greater Expansion in Fraud Customer investment in fraud solutions is increasing Online and mobile trends driving shift in fraud perpetration behaviors Market drivers Fraud mitigation sub-segments growing rapidly Compliance with regulation and protection of privacy adds to demand Data depth and bread
Slide 21: Geographic Expansion Contributes to Multi-year Growth
Geographic Expansion Contributes to Multi-year Growth We continue to invest in our 16 country locations, while evaluating opportunities for additional geographic expansion Organic and inorganic investment in existing geographies Rapid growth in Russia Continue close relationship in Brazil Expand int
Slide 22: M&A Remains Key Aspect of Strategic Execution
M&A Remains Key Aspect of Strategic Execution M&A provides Equifax with a balance of options to expand in close-in opportunities and to pursue longer-term plays consistent with our stated strategy Portfolio of initiatives framework Disciplined approach – Financial assessment – Operational integratio
Slide 23: CSC Enhances the 2013 Business Model
CSC Enhances the 2013 Business Model Generates additional $0.45–$0.50/share of adjusted EPS Contributes $110–$115M EBITDA Adds $115–$125M of revenue Expands Equifax margins Allows team to focus on innovation, not managing the relationship Opportunity to leverage process improvement expertise Very li
Slide 24: Equifax Model Delivers Attractive Shareholder Returns
Equifax Model Delivers Attractive Shareholder Returns Multi-year outlook** Revenue growth 7–10% Adjusted EPS growth 10–13% Operating margin +25 bps/year Adjusted ROIC* ~15% Dividends 25–35% of net income * Adjusted ROIC = net income (excluding acquisition amortization)/average long-term debt and sha
Slide 25: Equifax Model Delivers Attractive Shareholder Returns
Equifax Model Delivers Attractive Shareholder Returns Multi-year 2013** outlook** Revenue growth 10–12% 7–10% Adjusted EPS growth 20–25% 10–13% Operating margin 26–27% +25 bps/year Adjusted ROIC* ~14% ~15% Dividends 25–35% 25–35% of net income of net income * Adjusted ROIC = net income (excluding ac
Slide 26: © Equifax Confidential and Proprietary
© Equifax Confidential and Proprietary
Slide 27: Driving Growth in U.S. Consumer Information Solutions
DRIVING GROWTH IN U.S. CONSUMER INFORMATION SOLUTIONS Rudy Ploder, President U.S. Consumer Information Solutions © Equifax Confidential and Proprietary
Slide 28: U.S. Consumer Information Solutions (USCIS)
U.S. Consumer Information Solutions (USCIS) USCIS is a diversified and growing business that focuses on helping clients optimize and grow their portfolio of consumers and products We service markets beyond financial institutions… We enable opportunities for our clients… Target and acquire profitable
Slide 29: Decision 360 Allows Equifax to Solve Common Problems in Unique Ways
Decision 360 Allows for Equifax to Solve Common Problems in Unique Ways… Delivering insights into a consumer’s assets, income statement and liabilities like no one else can is core to our strategy Core credit data Alternative data 184M and growing 250M+ consumer NCTUE+ consumers credit files (20% no
Slide 30: U.S. Consumer Information Solutions (USCIS)
U.S. Consumer Information Solutions (USCIS) USCIS is driven by innovation and execution that have delivered consistent growth and financial results Key Business Performance Drivers Innovation: Leveraging new data and analytic capabilities to drive new products and services Execution: Deep focus on a
Slide 31: Key Initiatives Driving USCIS Forward
Key Initiatives Driving USCIS Forward Enabling USCIS is deeper an enterprise penetration distribution in key channel markets Organize around the customer, Mortgage leverage USCIS scale and reach Continue diversifying in market by to represent all of Equifax driving analytics to address value chain p
Slide 32: Key Market Focus
Key Market Focus USCIS serves as the sales and distribution face to the customer on behalf of enterprise. Deep customer knowledge leads to new product opportunities across the value chain. Ongoing regulatory concerns create demand for additional loan quality and Continuing successful product innovat
Slide 33: Decision 360 Key Wins in 2012
Key Wins in 2012 Customer Solution Why it matters Top 5 Financial Institution Modeling Analytic Platform > Equifax data becomes the foundation for consumer modeling and analytic development Decision 360 > 5-year revenue stream Top 5 Financial Institution Verification of Employment (VOE) > A fundamen
Slide 34: U.S. Consumer Information Solutions Strategic Outlook
U.S. Consumer Information Solutions Strategic Outlook Expansion in key markets Increased penetration of Decision 360 initiatives Recognized leader in identity authentication/management Superior decisioning solutions leveraging proprietary analytical driven insights Multi-year organic growth 5–7% Exp
Slide 35: © Equifax Confidential and Proprietary
© Equifax Confidential and Proprietary
Slide 36: Premier Provider of Small Business Insights
PREMIER PROVIDER OF SMALL BUSINESS INSIGHTS Alex Gonzalez, President North America Commercial Solutions © Equifax Confidential and Proprietary
Slide 37: North America Commercial Solutions (NACS) Profile
North America Commercial Solutions (NACS) Profile NACS uses its unique data sources, expertise in the small and medium business market, and advanced analytics to provide customers with solutions that help them grow their business Accessible data/attributes Key business challenges we solve Customer m
Slide 38: Execution and Innovation Drive Results
Execution and Innovation Drive Results Be the premier provider of small business intelligence to customers through industry-leading data, analytics, decisioning tools and customer service Strategic initiatives > Protect and grow the core – Increase share of banking by expanding presence in mid-tier
Slide 39: Driving NACS Forward
Driving NACS Forward Use unique assets …through an …to penetrate key markets… and competencies… enterprise channel > Core credit data: Focus on credit > Financial Services: Leverage > Organize around the customer, data for small and medium strong relationships within leverage scale and reach to busi
Slide 40: © Equifax Confidential and Proprietary
© Equifax Confidential and Proprietary
Slide 41: Superior Insights for Our Partners
SUPERIOR INSIGHTS FOR OUR PARTNERS Dann Adams, President Equifax Workforce Solutions © Equifax Confidential and Proprietary
Slide 42: Workforce Solutions Profile
Workforce Solutions Profile Workforce Solutions is building out the largest U.S.-based employment and income repository – The Work Number database – enabling two key business units Verification Services Employer Services Customer mix The Work Number drivers The Work Number enablers > Mortgage GSE re
Slide 43: Vision for Workforce Solutions
Vision for Workforce Solutions Workforce Solutions enables transparency for risk decisioning to clients and markets served by USCIS and Workforce Solutions. We also offer insights into workforce and HR-related metrics and benchmarks Strategic initiatives > Grow The Work Number records through mid-ma
Slide 44: Building a Path to 250 Million + Records
Building a Path to 250 Million + Records Records on The Work Number (M) The Work Number revenue per active record Strategies to grow records in the database Strategies to grow average revenue per record > Direct sales to employers > Penetration and value add in government > Commercial partnerships t
Slide 45: Strategy to Grow The Work Number Records
Strategy to Grow The Work Number Records We have 80% of the employers with over 10,000 employees reporting and now have also gone down-market The Work Number records market share % (non-farm, private and public) Emerging market Mid-market Large market © Equifax Confidential and Proprietary 45
Slide 46: Expanding Penetration and Markets Served
Expanding Penetration and Markets Served We will continue to penetrate originations and expand our presence along the lending value chain via analytic solutions and channel partners Market penetration for The Work Number instant verifications in originations © Equifax Confidential and Proprietary 46
Slide 47: Expanding Penetration: Mortgage Market
Expanding Penetration: Mortgage Market Our employment and income verification 100% solution allows us to penetrate further in originations, expand across the value chain and pursue new product initiatives 1. Penetrate originations > 100% solution penetration in the top 20 lenders > Penetration down
Slide 48: Expanding Markets Served: Government Market
Expanding Markets Served: Government Market Addressing a large opportunity within governmental agencies Government programs are expected to grow State budgets are under increasing scrutiny Verify income eligibility for governmental agencies Executive order: Reduce improper payments by $50B Executive
Slide 49: Workforce Solutions Strategic Outlook
Workforce Solutions Strategic Outlook Solid, sustainable growth in TWN records Deeper penetration of Verification Services in USCIS customer base Broaden markets served with Verification Services Multi-year organic growth 7–9% Expanding operating margins © Equifax Confidential and Proprietary 49
Slide 50: © Equifax Confidential and Proprietary
© Equifax Confidential and Proprietary
Slide 51: Break
BREAK © Equifax Confidential and Proprietary
Slide 52: The Consumers' Most Trusted Partner for Financial Insights
THE CONSUMERS’ MOST TRUSTED PARTNER FOR FINANCIAL INSIGHTS Trey Loughran, President North America Personal Solutions © Equifax Confidential and Proprietary
Slide 53: North America Personal Solutions (PSOL) Profile
North America Personal Solutions (PSOL) Profile PSOL will achieve double-digit growth by efficiently acquiring new customers, growing customer lifetime value and leveraging best practices in newer markets Personal Solutions vision We will empower people with the confidence and control to be their fi
Slide 54: Market Overview
Market Overview Direct market Key dynamics Offer credit and identity-focused products directly to consumers, Credit side still dominates; primarily on-line for one-time highly free trial/score driven transaction or monthly subscription fee; driven by bureaus and several Highly competitive media inde
Slide 55: North America Personal Solutions Business Model
North America Personal Solutions Business Model Business model Strengths Highly return-driven customer Markets Volume/spend/ media investment cost per Attractive, “credit-aware” acquisition Brand strength markets: U.S., Canada, U.K. X Common shared platform across all three markets High value produc
Slide 56: Strategic Focus
Strategic Focus Business model Strategic focus Markets Volume/spend/ cost per 1. Acquire new customers by 4. Extend best practices into acquisition efficiently scaling media spend existing markets and expand through the use of advanced into new markets analytics X Average 2. Provide best, most innov
Slide 57: Scaling Marketing Spend
Scaling Marketing Spend Volume/spend/cost per acquisition Improved data/ tools for insight on return on marketing investment What we’ve Deployment of better testing tools done Testing of different levels of media mix (on and offline) and optimization Careful introduction of free trial mix Leverage i
Slide 58: Customer Value Proposition
Customer Value Proposition Average revenue per user Consolidate offerings into more comprehensive set of features What we’ve Debt Advantage done Credit Equifax Complete Premier Identity Family Incorporate additional Equifax data and insights to expand customers’ understanding of financial position i
Slide 59: Extending Customer Life
Extending Customer Life Customer life Added features to products that promote retention What we’ve Developed more detailed churn and retention tools and metrics that allow done much quicker diagnosis of churn issues Improved performance on credit card updates/renewals Drive feature adoption and usag
Slide 60: Extending and Expanding Best Practices
Extending and Expanding Best Practices Market expansion What we’ve Extended PSOL U.S. platform to Canada and U.K. done Launched new product offerings in Canada and U.K. Implement U.S. testing and measurement tools in Canada and U.K. Where we’re headed Port relevant product and feature concepts from
Slide 61: Strategic Outlook
Strategic Outlook Business model Multi-year outlook Market Volume/spend/ Marketing CPA will increase but at slower rate than customer > Continued growth cost per in Canada and U.K. acquisition acquisition spend X Customer Average Moderating increase in ARPU lifetime revenue but will continue to grow
Slide 62: © Equifax Confidential and Proprietary
© Equifax Confidential and Proprietary
Slide 63: Premier Provider of Decisioning Insights
PREMIER PROVIDER OF DECISIONING INSIGHTS Paulino Barros, President Equifax International © Equifax Confidential and Proprietary
Slide 64: A Strong International Franchise in Key Growth Markets
A Strong International Franchise in Key Growth Markets Canada Consumer #1 Russia (43% interest) Commercial #2 Consumer #1 United Kingdom Consumer #2 Commercial #3 Iberia Spain consumer #1 Portugal consumer #1 India (49% interest) Active start-up Andean region Peru #1 Uruguay #1 El Salvador #1 Brazil
Slide 65: International Profile
International Profile Strong, broad-based Building blocks for growth Customer mix geographic presence > Canada > Differentiated data > Europe > Fraud – real time; across geographies > Latin America – Citadel > Russia > Identity authentication > India and management – eID Verifier > Decisioning platf
Slide 66: 2015 Vision for International
2015 Vision for International We will be the #1 or #2 credit and marketing information bureau in all markets where we operate. Focus on vertical industry growth – anchored by data, identity management, and technology and analytical solutions, as well as geographic expansion Strategic initiatives > D
Slide 67: Expanding Data Assets Diversifies and Broadens Opportunities
Expanding Data Assets Diversifies and Broadens Opportunities 3. Emerging data …and > Combine credit with other consumer beyond financials to give customers complete view Wealth data 2. Fraud and identity data > Fraud and identity data to Fraud data support our fraud initiative 4. Assemble the 360° v
Slide 68: Drive Differentiation through Technology and Analytical Services
Drive Differentiation through Technology and Analytical Services Increase technology services presence Accelerate deployment of decisioning platforms – Citadel (fraud) and InterConnect Expand and enhance analytics capabilities Create new competencies in third party data combined with Equifax data an
Slide 69: Strong Fraud Capabilities Serve a Broad-based Need
Strong Fraud Capabilities Serve a Broad-based Need Canada Iberia Latin America U.K. > Leverage fraud > Develop next generation > eID deployed in Chile with > Develop next generation consortium data (Financial application fraud solution focus on Telco and application fraud solution Institutions and T
Slide 70: Executing a Plan – Improving U.K. Performance
Executing a Plan – Improving U.K. Performance Focus on core business activities – implementing core competencies in sales, marketing, analytics, market expansion and operational efficiency – to drive revenue growth Increased level and depth of customer contact and insight Created partnerships for mo
Slide 71: Strategic Outlook
Strategic Outlook Focus on key market verticals – Financial Institutions, Telco and SME Leverage Technology and Analytical Services to deliver unique, high value solutions Expand into new geographies Multi-year organic growth 7–10% Attractive and sustainable operating margins © Equifax Confidential
Slide 72: © Equifax Confidential and Proprietary
© Equifax Confidential and Proprietary
Slide 73: Financials
FINANCIALS Lee Adrean, Chief Financial Officer © Equifax Confidential and Proprietary
Slide 74: Delivering Strong Organic Growth
Delivering Strong Organic Growth Contribution to year-over-year growth (constant $) Core non-mortgage 8.7% 6.1% 5.9% Mortgage initiatives 0.5% 1.3% 1.3% Core + initiatives 9.2% 7.4% 7.2% Mortgage market 4.2% 5.5% 3.5% Acquisitions 2.4% 2.2% 1.1% Brazil merger impact (4.7%) (3.7%) — Total revenue gro
Slide 75: Driving Improved EBITDA Margins
Driving Improved EBITDA Margins Factors driving margin expansion Factors which moderate margin expansion Revenue growth vs. fixed cost base Investment in growth initiatives – Proprietary high value offerings new products or markets (price for value) New products take time to scale Breadth and depth
Slide 76: Equifax Generates Strong Free Cash Flow
Equifax Generates Strong Free Cash Flow Note: reported net income; free cash flow is reported cash from operations less capital expenditures © Equifax Confidential and Proprietary 76
Slide 77: Priorities for Cash
Priorities for Cash Strong cash flow supports investment for organic growth, M&A and cash returns to shareholders © Equifax Confidential and Proprietary 77
Slide 78: Equifax Strategy Drives Attractive, Multi-year Growth
Equifax Strategy Drives Attractive, Multi-year Growth Revenue growth model Multi-year Operating organic growth margin trend USCIS 5–7% High 30’s/low 40’s N.A. Commercial 6–10% Low-to-mid 20’s Workforce Solutions 7–9% Mid-to-upper 20’s N.A. Personal Solutions 8–12% High 20’s International 7–10% Low 3
Slide 79: Operating Metrics
Operating Metrics Multi-year outlook Revenue growth 7–10% Operating margin +25 bps/year Adjusted EPS growth 10–13% Dividends 25–35% of net income Free cash flow conversion1 120–150% Adjusted ROIC2 ~15% Note: 1. Free cash flow/net income 2. Adjusted ROIC = Net income (excluding acquisition amortizati
Slide 80: Strategic Summary
STRATEGIC SUMMARY Rick Smith, Chairman and Chief Executive Officer © Equifax Confidential and Proprietary
Slide 81: Summary
Summary We are delivering on our promise of strong, consistent growth Our competencies provide a basis for sustainable competitive advantage Market trends are driving changes that create opportunities for Equifax to evolve Equifax management and operating discipline support strong and consistent exe
Slide 82: Q&A Panel
Q&A PANEL Rick Smith and Lee Adrean © Equifax Confidential and Proprietary
Slide 83: © Equifax Confidential and Proprietary
© Equifax Confidential and Proprietary