TransUnion Reports Second Quarter 2012 Results
CHICAGO, IL--(Marketwire - Aug 7, 2012) - TransUnion Corp. ("TransUnion" or the "Company") today announced results for the second quarter ended June 30, 2012(1).
Second Quarter 2012 Highlights
- Total revenue increased 10.0%; weakening foreign currencies accounted for a reduction in revenue of 2.1%.
- Revenue in USIS Online Data Services increased 10.8%, driven by an increase in credit report volumes.
- Revenue in USIS Decision Services increased 20.3%, driven by strong performance in Healthcare and Financial Services, and the integration of Financial Healthcare Systems (FHS).
- Revenue in International emerging markets increased 8.8%, driven by organic growth and the acquisitions of Crivo in Brazil and Credit Reference Bureau (CRB) in Africa.
- Weakening foreign currencies accounted for a reduction in emerging markets revenue of 14.4%.
- Acquisitions accounted for 16.1% of emerging markets revenue growth.
- Revenue in the Interactive segment increased 21.4%, driven by growth in the direct and indirect channels.
- Adjusted EBITDA(2) was $100.0 million, an increase of 9.6% compared to the second quarter of 2011. The corresponding margin was 35.3%, 10 basis points below the prior year primarily due to planned integration costs, the impact of foreign currency and investments in growth.
- During the quarter the Company closed the acquisition of an 85% ownership interest in CRB.
- During the quarter TransUnion Holding Company, Inc. ("TransUnion Holding") acquired 100% of the outstanding common stock of the Company. TransUnion Holding is owned 49.5% by affiliates of Advent International Corporation, 49.5% by affiliates of GS Capital Partners and 1% by members of management.
"Our positive momentum continued in the second quarter behind strong core business performance, the benefit of recent investments and positive macroeconomic trends in the U.S.," said Bobby Mehta, the Company's President and Chief Executive Officer. "In addition, we finalized the acquisition of CRB in Africa. CRB expands our credit bureau and collections presence into seven new African countries and enhances our premier position as the largest player in one of the fastest growing regions of the world. It also enhances our ability to support the expansion plans of our customers in South Africa."
1 To facilitate comparability with the prior year periods, the attached financial statements combine Successor and Predecessor information for the three and six months ended June 30, 2012. We present the combined information to assist readers in understanding and assessing the trends and significant changes in our results of operations on a comparable basis. We believe this combined presentation is appropriate because it provides a more meaningful comparison and more relevant analysis of our results of operations for the three and six month periods ended June 30, 2012, compared to the three and six month periods ended June 30, 2011, than a presentation of separate historical results for the Predecessor and Successor periods would provide. See our Quarterly Report on Form 10-Q for a presentation of Predecessor and Successor financial statements.
2 See below for a reconciliation of Adjusted Operating Income & Adjusted EBITDA to their most directly comparable GAAP measures, operating income and net income attributable to TransUnion, respectively.
Second Quarter 2012 Results
The Company reported revenue of $283.3 million, an increase of 10.0% compared to the second quarter of 2011. Weakening foreign currencies accounted for a reduction in revenue of 2.1%. Acquisitions accounted for 2.6% of revenue growth in the second quarter.
The operating loss of $28.8 million in the second quarter, compared to operating income of $60.5 million in the prior year, was impacted by $90.3 million of accelerated stock-based compensation and related expenses ("2012 Change in Control Transaction related expenses") resulting from 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 these items, Adjusted Operating Income was $61.5 million, down $5.3 million compared to the prior year primarily due to $14.2 million of incremental depreciation and amortization resulting from the 2012 Change in Control Transaction purchase accounting adjustments to record tangible and intangibles assets at fair value ("purchase accounting depreciation and amortization").
Additionally, non-operating income and expense in the second quarter of 2012 included $20.1 million of expenses primarily related to the 2012 Change in Control Transaction and the abandoned initial public offering process. The 2012 Change in Control Transaction related expenses in operating and non-operating income and the purchase accounting depreciation and amortization resulted in a net loss attributable to TransUnion of $55.5 million compared to net income of $22.9 million in the second quarter of 2011.
Segment Highlights
U.S. Information Services (USIS)
USIS revenue was $180.5 million, an increase of 8.9% percent compared to the second quarter of 2011, driven by double digit growth in Online Data Services and Decision Services. Acquisitions accounted for 1.0% of revenue growth.
- Online Data Services revenue was $125.4 million, an increase of 10.8%, driven by an increase in core credit report volumes.
- Credit Marketing Services revenue was $30.8 million, a decrease of 4.6%, due to lower card acquisition activity.
- Decision Services revenue was $24.3 million, an increase of 20.3%, driven by strong performance in Healthcare and Financial Services, and the integration of FHS.
Operating income of $10.8 million, compared to $42.3 million in the prior year, was impacted by $41.1 million of 2012 Change in Control Transaction related expenses. Adjusted Operating Income was $51.9 million, an increase of 6.8% compared to the prior year. In addition, operating income and Adjusted Operating Income were negatively impacted by $8.3 million of purchase accounting depreciation and amortization.
International
International revenue was $57.5 million, an increase of 5.5% compared to the second quarter of 2011. Weakening foreign currencies accounted for a reduction in revenue of 9.6%. Acquisitions accounted for 9.4% of revenue growth.
- Developed markets revenue was $23.0 million, an increase of 0.9%, driven by local currency growth. Weakening foreign currencies accounted for a reduction in revenue of 3.1%.
- Emerging markets revenue was $34.5 million, an increase of 8.8%, driven by local currency growth, and the acquisition of Crivo and CRB. Weakening foreign currencies accounted for a reduction in revenue of 14.4%. Acquisitions accounted for 16.1% of revenue growth.
The operating loss of $6.4 million, compared to operating income of $16.4 million in the prior year, was impacted by $14.4 million of 2012 Change in Control Transaction related expenses. Adjusted Operating Income was $8.0 million compared to $16.4 million in the prior year due to planned integration costs, continued investment in growth and the negative impact of foreign currency. In addition, operating income and Adjusted Operating Income were negatively impacted by $5.0 million of purchase accounting depreciation and amortization.
Interactive
Interactive revenue was $45.3 million, an increase of 21.4% compared to the second quarter of 2011, driven by higher subscription revenue in the direct and indirect channels.
Operating income of $14.2 million, compared to $14.7 million in the prior year, was impacted by $2.3 million of 2012 Change in Control Transaction related expenses. Adjusted Operating Income was $16.5 million, an increase of 12.2% compared to the prior year. In addition, operating income and Adjusted Operating Income were negatively impacted by $0.7 million of purchase accounting depreciation and amortization.
Year-to-Date 2012 Results
The Company reported revenue of $563.9 million for the first half ended June 30, 2012, an increase of 12.0% compared to the first half of 2011. Weakening foreign currencies accounted for a reduction in revenue of 1.6%. Acquisitions accounted for 2.6% of revenue growth in the first half of 2012.
Operating income of $36.8 million, compared to $115.6 million in the first half of 2011, was impacted by $90.3 million of 2012 Change in Control Transaction related expenses. Adjusted Operating Income was $127.1 million, an increase of 4.3% compared to the first half of 2011 despite the negative impact of $14.2 million of purchase accounting depreciation and amortization.
Additionally, non-operating income and expense in the first half of 2012 included $26.1 million of expenses primarily related to the 2012 Change in Control Transaction and the abandoned initial public offering process. The 2012 Change in Control Transaction related expenses in operating and non-operating income and the purchase accounting depreciation and amortization resulted in a net loss attributable to TransUnion of $45.3 million compared to a net loss of $2.6 million in the first half of 2011. The first half of 2011 included a $59.3 million loss on the early extinguishment of debt.
Adjusted EBITDA was $190.5 million, an increase of 11.7% compared to the first half of 2011, with a corresponding margin of 33.8% compared to 33.9% in the prior year.
- Revenue for U.S. Information Services was $361.3 million, an increase of 11.1% compared to the first half of 2011.
- Revenue for International was $114.1 million, an increase of 8.8%. Weakening foreign currencies accounted for a reduction in revenue of 7.5%.
- Revenue for Interactive was $88.5 million, an increase of 20.7% compared to the first half of 2011.
Selected Liquidity Data
Cash and cash equivalents was $86.0 million at June 30, 2012 and $107.8 million at December 31, 2011. Year-to-date cash provided by operating activities was $63.7 million. Other year-to-date cash activity included: $27.8 million used for cash capital expenditures; $9.8 million used for other investing activities; and $47.9 million used for financing activities.
Registration of 9.625%/10.375% Senior PIK Toggle Notes due 2018 by TransUnion Holding Company, Inc.
On July 31, 2012, TransUnion Holding filed a Registration Statement on Form S-4 with the Securities and Exchange Commission to offer to exchange the outstanding $600 million aggregate principal amount of 9.625%/10.375% Senior PIK Toggle Notes due 2018 for newly issued SEC-registered notes with the same terms as the outstanding notes. The statements in today's release do not include the activity of TransUnion Holding including the issuance of the $600 million aggregate principal amount of debt by TransUnion Holding or the associated interest expense. Consolidated financial statements for TransUnion Holding will be provided to the trustee in accordance with the indenture.
Earnings Conference Call
In conjunction with this release, TransUnion will host a conference call today, August 7, 2012, at 8:00 a.m. (CDT) via a live teleconference to discuss the business trends supporting second quarter 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: [98490682]
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 32 countries around the world. www.transunion.com
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 our Annual Report on Form 10-K for the year ended December 31, 2011 and Quarterly Report on Form 10-Q for the period ended June 30, 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 CORP. AND SUBSIDIARIES | |||||||||
| Consolidated Balance Sheets | |||||||||
| (in millions, except per share data) | |||||||||
| June 30, 2012 | December 31, 2011 | ||||||||
| Unaudited | |||||||||
| Assets | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 86.0 | $ | 107.8 | |||||
| Trade accounts receivable, net of allowance of $3.7 and $1.2 | 169.9 | 139.4 | |||||||
| Other current assets | 74.3 | 55.4 | |||||||
| Current assets of discontinued operations | - | 0.1 | |||||||
| Total current assets | 330.2 | 302.7 | |||||||
| Property, plant and equipment, net of accumulated depreciation and amortization of $5.1 and $342.3 | 113.7 | 109.0 | |||||||
| Other marketable securities | 10.6 | 10.3 | |||||||
| Goodwill | 1,716.3 | 275.2 | |||||||
| Other intangibles, net | 1,972.1 | 230.8 | |||||||
| Other assets | 98.2 | 77.8 | |||||||
| Total assets | $ | 4,241.1 | $ | 1,005.8 | |||||
| Liabilities and stockholders' equity | |||||||||
| Current liabilities: | |||||||||
| Trade accounts payable | $ | 71.8 | $ | 75.1 | |||||
| Current portion of long-term debt | 10.5 | 21.8 | |||||||
| Other current liabilities | 162.5 | 100.2 | |||||||
| Current liabilities of discontinued operations | - | 0.4 | |||||||
| Total current liabilities | 244.8 | 197.5 | |||||||
| Long-term debt | 1,695.3 | 1,579.4 | |||||||
| Other liabilities | 677.7 | 53.3 | |||||||
| Total liabilities | 2,617.8 | 1,830.2 | |||||||
| Stockholders' equity: | |||||||||
| Preferred stock, $0.01 par value; 0 shares authorized; no shares issued or outstanding | - | - | |||||||
| Common stock, $0.01 par value; one thousand shares authorized, less than 0.1 and 29.8 shares issued at June 30, 2012, and December 31, 2011, respectively; less than 0.1 and 29.8 shares outstanding as of June 30, 2012, and December 31, 2011, respectively | - | 0.3 | |||||||
| Additional paid-in capital | 1,592.7 | 893.9 | |||||||
| Treasury stock at cost; 0 shares at June 30, 2012, and less than 0.1 shares December 31, 2011 | - | (0.2 | ) | ||||||
| Retained earnings | 9.6 | (1,739.0 | ) | ||||||
| Accumulated other comprehensive income (loss) | (7.6 | ) | (3.6 | ) | |||||
| Total TransUnion Corp. stockholders' equity | 1,594.7 | (848.6 | ) | ||||||
| Noncontrolling interests | 28.6 | 24.2 | |||||||
| Total stockholders' equity | 1,623.3 | (824.4 | ) | ||||||
| Total liabilities and stockholders' equity | $ | 4,241.1 | $ | 1,005.8 | |||||
| TRANSUNION CORP. AND SUBSIDIARIES | |||||||||||||||||
| Consolidated Statements of Income | |||||||||||||||||
| (in millions, except per share data) | |||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||||
| (Unaudited) | |||||||||||||||||
| Revenue | $ | 283.3 | $ | 257.5 | $ | 563.9 | $ | 503.4 | |||||||||
| Operating expenses | |||||||||||||||||
| Cost of services (exclusive of depreciation and amortization below) |
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