TransUnion Reports First Quarter 2014 Results
CHICAGO, IL--(Marketwired - May 8, 2014) - TransUnion Holding Company, Inc. today announced results for the three months ended March 31, 2014.
First Quarter 2014 Highlights
Total revenue for the first quarter increased 4.4% compared to the first quarter of 2013. Weakening foreign currencies accounted for a decrease in revenue of 2.0%, while 2013 acquisitions accounted for an increase in revenue of 5.3%. Key highlights include:
- Revenue in USIS Decision Services increased 29.4% compared to the first quarter of 2013, driven by revenue from our recent acquisition of eScan Data Systems and organic growth in the healthcare market.
- Revenue in the Interactive segment increased 7.8% compared to the first quarter of 2013, driven by an increase in the average number of subscribers and volume in our indirect channel.
- Excluding the impact of foreign currencies and acquisitions, revenue in the International segment increased 6.3% compared to the first quarter of 2013.
"In the first quarter, we generated constant currency revenue growth across all segments, driven by strong performance in Healthcare and Insurance in USIS, Brazil and India in International and in Interactive. Our recent acquisitions of eScan and TLO are performing well and the integration is producing expected results," said Jim Peck, TransUnion's president and chief executive officer. "All of this gives us good momentum as we head into the remaining quarters of the year and continue to execute against our long-term strategic growth plan."
First Quarter 2014 Results
The Company reported revenue of $303.4 million, an increase of 4.4% compared to the first quarter of 2013. Weakening foreign currencies accounted for a decrease in revenue of 2.0%. 2013 acquisitions accounted for an increase in revenue of 5.3%.
Operating income was $34.8 million, compared to $44.2 million in the prior year. Adjusted Operating Income(1) was $34.8 million, compared to $43.1 million in the prior year. Adjusted EBITDA(1) was $90.6 million, compared to $92.2 million in the prior year. Results were impacted by continued investments in strategic initiatives to drive long-term, diversified revenue growth and more efficient operations.
Non-operating expense was $48.4 million, compared to $50.1 million for the first quarter of 2013. The net loss attributable to the company was $14.7 million for the first quarter of 2014, compared to $6.3 million for the first quarter of 2013.
Segment Highlights
U.S. Information Services (USIS)
Total USIS revenue was $194.2 million, an increase of 5.7% compared to the first quarter of 2013.
- Online Data Services revenue was $131.2 million, an increase of 3.2% compared to the first quarter of 2013, driven by our acquisition of TLO and slight increase in online credit report volumes.
- Credit Marketing Services revenue was $30.9 million, a decrease of 2.8% compared to the first quarter of 2013, due primarily to a decrease in demand for custom data sets and archive information in the financial services market.
- Decision Services revenue was $32.1 million, an increase of 29.4% compared to the first quarter of 2013, driven by revenue from our acquisition of eScan Data Systems and organic growth in our healthcare market.
Operating income for USIS was $32.4 million for the first quarter of 2014, compared to $43.1 million for the prior year. Operating income decreased due to an increase in depreciation and amortization resulting from investments to upgrade our technology platform, continued investment in strategic growth initiatives and integration costs from our eScan and TLO acquisitions, partially offset by the increase in revenue.
International
Total International revenue was $54.1 million, a decrease of 2.9% compared to the first quarter of 2013. Excluding the impact of foreign currencies and acquisitions, revenue increased 6.3%. Weakening foreign currencies accounted for a reduction in revenue of 10.6%, while 2013 acquisitions accounted for an increase in revenue of 1.4%.
- Developed markets revenue was $21.5 million, a decrease of 2.3% compared to the first quarter of 2013. Excluding the impact of foreign currencies, revenue increased 1.9% compared to the first quarter of 2013.
- Emerging markets revenue was $32.6 million, a decrease of 3.3% compared to the first quarter of 2013. Excluding the impact of weakening foreign currencies and acquisitions, revenue increased by 9.2% compared to the first quarter of 2013.
Operating income for International was $2.2 million for the first quarter of 2014, compared to $2.4 million for the prior year. Operating income was down slightly due to continued investments in growth initiatives.
Interactive
Interactive revenue was $55.1 million, an increase of 7.8% compared to the first quarter of 2013, driven by an increase in the average number of subscribers and volume in our indirect channel.
Operating income for Interactive was $19.0 million for the first quarter of 2014, compared to $15.4 million for the prior year. Operating income increased due to the increase in revenue and a decrease in advertising expense.
Selected Liquidity Data
Cash and cash equivalents was $59.4 million at March 31, 2014, and $111.2 million at December 31, 2013. First quarter cash used by operating activities was $6.1 million. First quarter capital expenditures was $38.8 million compared to $16.4 million in the first quarter of 2013, due primarily to the upgrade of our technology platform and improvements to our corporate headquarters. Other cash used for investing activities included $39.1 million for acquisitions and purchases of noncontrolling interests, principally increasing our stake in Credit Information Bureau (India) Limited ("CIBIL"). Net cash provided by financing activities was $24.8 million. The effect of exchange rate changes on cash was a $0.6 million decrease.
Subsequent Events
On April 9, 2014, TransUnion Corp. ("TransUnion Corp") and Trans Union LLC refinanced and amended the senior secured credit facility. The refinancing resulted in an increase of the outstanding term loan from $1,120.5 million to $1,900.0 million. The amendment, among other things, reduced the interest rate floor and margins, reduced the amount available under the revolving line of credit from $210.0 million to $190.0 million, extended the maturity dates, and changed certain covenant requirements. The additional borrowings were used in part to repay all amounts outstanding under the existing revolving line of credit and pay fees and expenses associated with the refinancing transaction. On May 9, 2014, the remaining borrowings will be used to redeem the entire $645.0 million outstanding balance of the 11.375% notes issued by TransUnion Financing Corp and Trans Union LLC including unpaid accrued interest and a prepayment premium. We refer to these transactions collectively as the "2014 Refinancing Transaction." The 2014 Refinancing Transaction is expected to result in a net gain of approximately $30 million that will be recorded in the consolidated statement of income and approximately $9 million of additional deferred financing fees that will be recorded on the balance sheet in the second quarter of 2014. The 2014 Refinancing Transaction is also expected to result in a reduction of cash interest expense of approximately $45 million annually at current interest rates beginning on May 9, 2014, the date the 11.375% notes will be repaid.
Earnings Conference Call
In conjunction with this release, TransUnion will host a conference call today, May 8, at 8:00 a.m. (CT) to discuss the business trends supporting first quarter 2014 results. The discussion will be available via replay on the Investor Relations page at TransUnion.com shortly after the teleconference. This earnings release is also available on that website. The teleconference dial-in information is:
Primary Dial-In: 866.543.6403
Secondary Dial-In: 617.213.8896
Passcode: 65740979
About TransUnion
As a global leader in information and risk management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering high quality data, and integrating advanced analytics and enhanced decision-making capabilities. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Founded in 1968 and headquartered in Chicago, TransUnion reaches businesses and consumers in 33 countries around the world.
Forward-Looking Statements
This earnings release 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 uncertainties. Actual results may differ materially from those described in the forward-looking statements. Factors that could cause TransUnion's actual results to differ materially from those described in the forward-looking statements can be found in TransUnion Holding's and TransUnion Corp.'s combined Annual Report on Form 10-K for the year ended December 31, 2013 and TransUnion Holding's Form 10-Q for the quarter ended March 31, 2014, which have been filed with the Securities and Exchange Commission and are available on TransUnion's website (http://www.transunion.com/corporate/about-transunion/investor-relations.page) and on the Securities and Exchange Commission's website (www.sec.gov). Many of these factors are beyond our control. The forward-looking statements contained in this earnings release speak only as of the date of this earnings release. We undertake no obligation to publicly release the result of any revisions to these forward-looking statements to reflect the impact of events or circumstances that may arise after the date of this earnings release.
(1) See Key Financial Performance Measures and Reconciliation of Non GAAP Measures for a reconciliation of Adjusted Operating Income and Adjusted EBITDA to their most directly comparable GAAP measures, operating income and net income attributable to the Company, respectively.
| TRANSUNION HOLDING COMPANY, INC. AND SUBSIDIARIES | |||||||||
| Consolidated Balance Sheets | |||||||||
| (in millions, except per share data) | |||||||||
| March 31, 2014 | December 31, 2013 | ||||||||
| Unaudited | |||||||||
| Assets | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 59.4 | $ | 111.2 | |||||
| Trade accounts receivable, net of allowance of $1.0 and $0.7 | 182.1 | 165.0 | |||||||
| Other current assets | 62.0 | 73.5 | |||||||
| Total current assets | 303.5 | 349.7 | |||||||
| Property, plant and equipment, net of accumulated depreciation and amortization of $82.3 and $70.2 | 149.3 | 150.4 | |||||||
| Marketable securities | 10.8 | 9.9 | |||||||
| Goodwill | 1,917.2 | 1,909.7 | |||||||
| Other intangibles, net of accumulated amortization of $266.5 and $227.5 | 1,903.6 | 1,934.0 | |||||||
| Other assets | 168.3 | 138.6 | |||||||
| Total assets | $ | 4,452.7 | $ | 4,492.3 | |||||
| Liabilities and stockholders' equity | |||||||||
| Current liabilities: | |||||||||
| Trade accounts payable | $ | 94.2 | $ | 100.3 | |||||
| Short-term debt and current portion of long-term debt | 45.7 | 13.8 | |||||||
| Other current liabilities | 116.0 | 133.5 | |||||||
| Total current liabilities | 255.9 | 247.6 | |||||||
| Long-term debt | 2,845.8 | 2,853.1 | |||||||
| Deferred taxes | 621.6 | 636.9 | |||||||
| Other liabilities | 19.7 | 22.6 | |||||||
| Total liabilities | 3,743.0 | 3,760.2 | |||||||
| Redeemable noncontrolling interests | 17.5 | 17.6 | |||||||
| Stockholders' equity: | |||||||||
| Common stock, $0.01 par value; 200.0 million shares authorized at March 31, 2014 and December 31, 2013, 110.8 million and 110.7 shares issued at March 31, 2014 and December 31, 2013, respectively, and 110.3 million shares and 110.2 million shares outstanding as of March 31, 2014 and December 31, 2013, respectively | 1.1 | 1.1 | |||||||
| Additional paid-in capital | 1,123.1 | 1,121.8 | |||||||
| Treasury stock at cost; 0.5 million shares at March 31, 2014 and December 31, 2013, respectively | (4.1 | ) | (4.1 | ) | |||||
| Accumulated deficit | (432.4 | ) | (417.7 | ) | |||||
| Accumulated other comprehensive loss | (81.2 | ) | (73.2 | ) | |||||
| Total TransUnion Holding Company, Inc. stockholders' equity | 606.5 | 627.9 | |||||||
| Noncontrolling interests | 85.7 | 86.6 | |||||||
| Total stockholders' equity | 692.2 | 714.5 | |||||||
| Total liabilities and stockholders' equity | $ | 4,452.7 | $ | 4,492.3 | |||||
| TRANSUNION HOLDING COMPANY, INC. AND SUBSIDIARIES | |||||||||
| Consolidated Statements of Income (Loss) (Unaudited) | |||||||||
| (in millions) | |||||||||
| Three Months Ended March 31, | |||||||||
| 2014 | 2013 | ||||||||
| Revenue | $ | 303.4 | $ | 290.5 | |||||
| Operating expenses | |||||||||
| Cost of services (exclusive of depreciation and amortization below) | 120.9 | 117.7 | |||||||
| Selling, general and administrative | 96.2 | 83.3 | |||||||
| Depreciation and amortization | 51.5 | 45.3 | |||||||
| Total operating expenses | 268.6 | 246.3 | |||||||
| Operating income | 34.8 | 44.2 | |||||||
| Non-operating income and expense | |||||||||
| Interest expense | (50.8 | ) | (49.8 |
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