TransUnion Reports Fourth Quarter & Full Year 2012 Results

CHICAGO, IL--(Marketwire - Feb 25, 2013) - TransUnion today announced results for the fourth quarter and fiscal year ended December 31, 2012. This is a combined announcement that includes consolidated financial statements for TransUnion Holding Company, Inc. ("TransUnion Holding," and together with its consolidated subsidiaries, the "Company") and TransUnion Corp., a direct 100% owned subsidiary of TransUnion Holding⁽¹⁾.

Fourth Quarter 2012 Highlights

• Total revenue for the fourth quarter increased 12.4%. Weakening foreign currencies accounted for a reduction in revenue of 0.4% and acquisitions accounted for an increase in revenue of 3.0%. 
  
  
  
  • Revenue in USIS Online Data Services increased 9.4%, driven by an increase in online credit report volumes in the financial services and reseller markets.
    
  
  
  • Revenue in USIS Decision Services increased 15.1%, driven by strong performance in Financial Services and Healthcare insurance eligibility and patient payment estimation. 
    
  
  
  • Revenue in International emerging markets increased 22.6%, driven by increased volumes in all regions and the acquisitions of Crivo Sistemas em Informatica S.A. ("Crivo") in Brazil and Credit Reference Bureau (Holdings) Limited ("CRB") in Africa.
    
    
    
    • Weakening foreign currencies accounted for a reduction in emerging markets revenue of 4.9%. 
      
    
    
    • Acquisitions accounted for an increase in emerging markets revenue of 23.4%.
    
    
    
    
  
  
  • Revenue in the Interactive segment increased 23.1%, driven by an increase in the average number of subscribers in the indirect channel and an increase in the average revenue per subscriber in the direct channel.
  
  
  
  


• Adjusted EBITDA⁽²⁾ was $89.1 million, an increase of 2.9% compared to the prior year, while the Company continued to invest in new initiatives to drive long-term growth. 

"Our positive momentum continued in the fourth quarter as we closed out a strong fiscal 2012, highlighted by double-digit organic constant currency revenue growth and high single-digit EBITDA growth. This performance was driven by strong core business results, investments in high growth verticals and markets, and positive macroeconomic trends," said Bobby Mehta, the Company's former president and chief executive officer. "As I transition into my new role of Board member, strategic advisor and investor, my conviction regarding the future prospects for TransUnion remains stronger than ever."

The Company's new president and chief executive officer, Jim Peck added, "The positive momentum we established in 2012 positions us for continued success in 2013 and beyond. I am excited to lead TransUnion through this next phase of growth and achievement." 

¹ Due to the acquisition of TransUnion Corp. by TransUnion Holding, TransUnion Corp.'s financial statements are prepared on a Predecessor and Successor basis. In this earnings release, we combine the Predecessor and Successor results and compare the combined TransUnion Holding and TransUnion Corp. results in 2012 with the TransUnion Corp. results in 2011. TransUnion Holding and TransUnion Corp. operate as one business, with one management team. Management believes combining the earnings release of TransUnion Holding and TransUnion Corp. provides the following benefits: enhances investors' understanding of TransUnion Holding and TransUnion Corp. by enabling investors to view the business as a whole, the same manner as management views and operates the business; provides a more readable presentation of required disclosures with less duplication, since a substantial portion of the Company's disclosures apply to both TransUnion Holding and TransUnion Corp; and creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

² See page 18 for a reconciliation of Adjusted Operating Income & Adjusted EBITDA to their most directly comparable GAAP measures, operating income and net income attributable to the Company, respectively.

Fourth Quarter 2012 Results

The Company reported revenue of $284.4 million, an increase of 12.4% compared to the fourth quarter of 2011. Weakening foreign currencies accounted for a reduction in revenue of 0.4%. Acquisitions accounted for an increase in revenue of 3.0%.

Operating income of $43.4 million in the fourth quarter, compared to $64.3 million in the prior year, was negatively impacted by a $22.2 million increase in depreciation and amortization, primarily resulting from purchase accounting adjustments to record tangible and intangibles assets at fair value due to the acquisition of TransUnion Corp. by TransUnion Holding on April 30, 2012 (the acquisition and related transactions being referred to herein as the "2012 Change in Control Transaction"). Excluding depreciation and amortization, operating income increased 1.5% compared to the fourth quarter of 2011, while the Company continued to invest in new initiatives to drive long-term growth. 

Non-operating expense was $46.5 million in the fourth quarter of 2012 compared to $33.5 million in the prior year due to an increase in interest expense primarily related to the issuance of $600 million and $400 million principal amount of senior unsecured PIK toggle notes in the second quarter of 2012 and the fourth quarter of 2012, respectively. Higher interest expense and the purchase accounting depreciation and amortization resulted in a net loss attributable to the Company of $8.2 million compared to net income of $16.3 million in the fourth quarter of 2011. 

Segment Highlights

U.S. Information Services (USIS)

USIS revenue was $178.2 million, an increase of 9.0% percent compared to the fourth quarter of 2011, with increases in all platforms due to improved market conditions and strong performance in Financial Services and Healthcare.

• Online Data Services revenue was $120.3 million, an increase of 9.4%, driven by an increase in core credit report volumes.
  


• Credit Marketing Services revenue was $32.8 million, an increase of 3.5%, due to greater demand for custom data sets and archive information, as customers increased their credit marketing programs.
  


• Decision Services revenue was $25.1 million, an increase of 15.1%, driven by strong performance in Financial Services and Healthcare insurance eligibility and patient payment estimation. 

Operating income of $41.2 million, compared to $47.0 million in the prior year, was negatively impacted by $12.8 million of additional depreciation and amortization, primarily resulting from purchase accounting adjustments related to the 2012 Change of Control Transaction. Excluding depreciation and amortization, USIS operating income increased 11.2% compared to the fourth quarter of 2011. 

International

International revenue was $60.4 million, an increase of 15.5% compared to the fourth quarter of 2011. Weakening foreign currencies accounted for a reduction in revenue of 1.9%. Acquisitions accounted for an increase in revenue of 13.6%. 

• Developed markets revenue was $23.0 million, an increase of 5.5%, due to higher volumes in Canada and Hong Kong, and an increase of 2.3% due to the impact of strengthening foreign currencies.
  


• Emerging markets revenue was $37.4 million, an increase of 22.6%, driven by increased volumes in all regions and the acquisition of Crivo and CRB. Weakening foreign currencies accounted for a reduction in revenue of 4.9%. Acquisitions accounted for an increase in revenue of 23.4%.

Operating income of $5.9 million, compared to $16.6 million in the prior year, was negatively impacted by $7.8 million of additional depreciation and amortization, primarily resulting from purchase accounting adjustments related to the 2012 Change of Control Transaction. Excluding depreciation and amortization, International operating income declined 15.6% compared to the fourth quarter of 2011. The remaining decline is attributed to planned integration costs, continued investment in growth and the negative impact of foreign currency. 

Interactive

Interactive revenue was $45.8 million, an increase of 23.1% compared to the fourth quarter of 2011, driven by an increase in the average number of subscribers in the indirect channel and an increase in the average revenue per subscriber in the direct channel. 

Operating income of $17.2 million increased 2.4% compared the prior year due to the increase in revenue and despite the negative impact of $1.0 million from additional depreciation and amortization, primarily resulting from purchase accounting adjustments related to the 2012 Change of Control Transaction. Excluding depreciation and amortization, Interactive operating income increased 7.9% compared to the fourth quarter of 2011. 

Year-to-Date 2012 Results

The Company reported revenue of $1,140.0 million for the full year of 2012, an increase of 11.3% compared to 2011. Weakening foreign currencies accounted for a reduction in revenue of 1.3%. Acquisitions accounted for an increase in revenue of 2.7%. 

• Revenue for U.S. Information Services was $725.5 million, an increase of 9.9% compared to the full year of 2011.
  


• Revenue for International was $234.4 million, an increase of 8.5% compared to the full year of 2011. Weakening foreign currencies accounted for a reduction in revenue of 6.2%. Acquisitions accounted for an increase in revenue of 10.5%. 
  


• Revenue for Interactive was $180.1 million, an increase of 21.9% compared to the full year of 2011.

Operating income of $141.0 million, compared to $252.7 million in the full year of 2011, was impacted by $90.7 million of accelerated stock-based compensation and related expenses resulting from the 2012 Change in Control Transaction. Adjusted Operating Income of $231.7 million, compared to $259.0 million in the prior year, was negatively impacted by $58.9 million of additional depreciation and amortization, primarily resulting from purchase accounting adjustments related to the 2012 Change of Control Transaction. Excluding depreciation and amortization, operating income decreased 15.6% and Adjusted Operating Income increased 9.2% compared to the prior year. 

Non-operating expense was $202.2 million in 2012 compared to $185.6 million in the prior year. The full year of 2012 included $42.2 million of acquisition expenses primarily related to the 2012 Change in Control Transaction and the abandoned initial public offering process. The full year of 2011 included a $59.3 million loss on the early extinguishment of debt. The expenses related to the 2012 Change in Control Transaction included in operating and non-operating income and the purchase accounting depreciation and amortization resulted in a net loss attributable to TransUnion of $63.7 million compared to net income of $40.8 million in the full year of 2011.

Adjusted EBITDA was $385.5 million, an increase of 9.3% compared to the full year of 2011, with a corresponding margin of 33.8% compared to 34.5% in the prior year.

Selected Liquidity Data

Cash and cash equivalents was $154.3 million at December 31, 2012 and $107.8 million at December 31, 2011. Cash provided by operating activities of TransUnion Corp. in 2012 was $144.1 million. Other 2012 cash activity of TransUnion Corp. included: $69.2 million used for cash capital expenditures; $11.6 million used for other investing activities; $16.9 million used for financing activities; and $0.1 million provided from the effect of exchange rate changes on cash.

Recent Developments

Issuance of $400 Million 8.125%/8.875% Senior PIK Toggle Notes Due 2018

On November 1, 2012, TransUnion Holding issued $400.0 million principal amount of 8.125%/8.875% senior unsecured PIK toggle notes due June 15, 2018, at an offering price of 99.5% in a private placement to certain investors. The notes contain a registration rights agreement that will require the Company to exchange the notes for an equal amount of notes registered with the SEC. The indenture governing these notes and the nonfinancial covenants are substantially similar to the outstanding senior unsecured PIK toggle notes. The proceeds were used to pay a $373.8 million dividend to shareholders and to pay various costs associated with issuing the new debt and obtaining consents from existing debt holders. In addition, TransUnion LLC prepaid $10.0 million of the senior secured term loan with cash on hand.

Appointment of Chief Executive Officer

On December 11, 2012 TransUnion announced that Jim Peck had been named the chief executive officer (CEO) and president of the company, effective December 31, 2012. Peck succeeds Bobby Mehta who, as previously announced, will continue to serve on TransUnion's board and serve as an advisor to the company. Peck, 49, comes to TransUnion from Reed Elsevier where he has led the LexisNexis Risk division since 2004, most recently serving as the CEO since October of 2008.

Refinancing of Senior Secured Credit Facilities

On February 4, 2013, the Company signed amendment No. 4 to its senior secured credit facility, which will be effective March 1, 2013. The amendment, among other things, lowered the floor on the term loan from 1.50% to 1.25%, lowered the margin on the term loan from 4.00% to 3.00%, extended the term loan maturity date one year to February 2019, delayed the first required excess cash payments until 2014, and relaxed certain covenant requirements.

Earnings Conference Call

In conjunction with this release, TransUnion will host a conference call today, February 25, 2013, at 8:00 a.m. (CT) via a live teleconference to discuss the business trends supporting fourth quarter and full year 2012 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:

Domestic dial-in: 866-271-0675

International dial-in: 617-213-8892

Teleconference code: 18739415

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 press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Any statements made in this press release that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plans and strategies. These statements often include words such as "anticipate," "expect," "suggest," "plan," "believe," "intend," "estimate," "target," "project," "forecast," "should," "could," "would," "may," "will" and other similar expressions.

We base these forward-looking statements on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at the time such statements were made. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements. Factors that may materially affect such forward-looking statements include: macroeconomic and industry trends and adverse developments in the debt, consumer credit and financial services markets; our ability to maintain the security and integrity of our data; our ability to deliver services timely without interruption; our ability to maintain our access to data sources; government regulation and changes in the regulatory environment; changes in federal, state, local or foreign tax law; litigation or regulatory proceedings; our ability to effectively develop and maintain strategic alliances and joint ventures; our ability to make acquisitions and integrate the operations of other businesses; our ability to timely develop new services; our ability to manage and expand our operations and keep up with rapidly changing technologies; our ability to manage expansion of our business into international markets; economic and political stability in international markets where we operate; fluctuations in exchange rates; our ability to effectively manage our costs; our ability to provide competitive services and prices; our ability to make timely payments of principal and interest on our indebtedness; our ability to satisfy covenants in the agreements governing our indebtedness; our ability to maintain our liquidity; our ability to protect our intellectual property; our ability to retain or renew existing agreements with long-term customers; our ability to access the capital markets; further consolidation in our end customer markets; reliance on key management personnel; and other factors described under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" of TransUnion Holding and TransUnion Corp.'s combined Annual Report on Form 10-K for the year ended December 31, 2012. Many of these factors are beyond our control. The forward-looking statements contained in this press release speak only as of the date of this press release. We undertake no obligation to publicly release the result of any revisions to these forward-looking statements, to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.

TRANSUNION HOLDING COMPANY, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
(in millions, except per share data)
			December 31, 2012
Assets
Current assets:
	Cash and cash equivalents		$	154.3
	Trade accounts receivable, net of allowance of $1.7			163.6
	Other current assets			82.7
Total current assets				400.6
Property, plant and equipment, net of accumulated depreciation and amortization of $26.4				121.2
Other marketable securities				11.4
Goodwill				1,804.2
Other intangibles, net				1,911.6
Other assets				129.8
Total assets			$	4,378.8
Liabilities and stockholders' equity
Current liabilities:
	Trade accounts payable		$	78.4
	Current portion of long-term debt			10.6
	Other current liabilities			129.3
Total current liabilities				218.3
Long-term debt				2,670.3
Other liabilities				679.4
Total liabilities				3,568.0
Redeemable noncontrolling interests				14.7
Stockholders' equity:
	Common stock, $0.01 par value; 200.0 million shares authorized at December 31, 2012, 110.2 million shares issued and 110.1 million shares outstanding as of December 31, 2012			1.1
	Additional paid-in capital			1,109.4
	Treasury stock at cost; 0.1 million shares at December 31, 2012			(0.7	)
	Retained earnings (accumulated deficit)			(382.6	)
	Accumulated other comprehensive income (loss)			(24.4	)
Total TransUnion Holding Company, Inc. stockholders' equity				702.8
Noncontrolling interests				93.3
Total stockholders' equity				796.1
Total liabilities and stockholders' equity			$	4,378.8

TRANSUNION HOLDING COMPANY, INC. AND SUBSIDIARIES
Consolidated Statement of Income
(in millions)
			From the Date of Inception Through December 31, 2012
Revenue			$	767.0
Operating expenses
	Cost of services (exclusive of depreciation and amortization below)			298.2
	Selling, general and administrative			212.6
	Depreciation and amortization			115.0
Total operating expenses				625.8
Operating income				141.2
Non-operating income and expense
	Interest expense			(125.0	)
	Interest income			0.8
	Other income and (expense), net			(14.3	)
Total non-operating income and expense				(138.5	)
Income from operations before income taxes				2.7
Provision for income taxes				(6.6	)
Net loss				(3.9	)
Less: net income attributable to noncontrolling interests				(4.9	)
Net loss attributable to TransUnion Holding Company, Inc.			$	(8.8	)

TRANSUNION HOLDING COMPANY, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(in millions)
					From the Date of Inception Through December 31, 2012
Cash flows from operating activities:				Information for Good®. Connect with us Solutions TruAudience TruValidate TruVision TruIQ TruEmpower TruLookup TruContact Industries Automotive Communications Financial Services Gaming Insurance Media & Entertainment Explore all Industries  Business Needs Credit Portfolio Management Customer Acquisition Debt Recovery Financial Inclusion Fraud Prevention Improve Customer Experience Company About Us Careers Partners Investor relations Newsroom Sustainability Diversity, Equity & Inclusion Global Technology Contact Us Support Consumer Support Services Business Support Services Compliance & Permissible Purpose Data Security Data Reporting Do not sell or share my personal information Personal information we collect Limit the use of my sensitive personal information Solutions TruAudience TruValidate TruVision TruIQ TruEmpower TruLookup TruContact Industries Automotive Communications Financial Services Gaming Insurance Media & Entertainment Business Needs Credit Portfolio Management Customer Acquisition Debt Recovery Financial Inclusion Fraud Prevention Improve Customer Experience Company About Us Careers Partners Investor relations Newsroom Sustainability Diversity, Equity & Inclusion Global Technology Contact Us Support Consumer Support Services Business Support Services Compliance & Permissible Purpose Data Security Data Reporting Do not sell or share my personal information Personal information we collect Limit the use of my sensitive personal information Terms of Use Privacy Policy FCPA policy Cookie Settings Accessibility Sitemap © Copyright 2023 TransUnion LLC. All Rights Reserved.