TransUnion Reports Second Quarter 2014 Results
CHICAGO, IL--(Marketwired - Aug 7, 2014) - TransUnion Holding Company, Inc. today announced results for the three and six months ended June, 30, 2014.
Second Quarter 2014 Highlights
Total revenue for the second quarter increased 8.9% compared with the second quarter of 2013. Weakening foreign currencies accounted for a decrease in revenue of 1.6%, while acquisitions accounted for an increase in revenue of 6.5%. Key highlights include:
- Revenue in the Interactive segment increased 11.4% compared with the second quarter of 2013, driven by an increase in the average number of subscribers and volume in our indirect channel.
- Revenue in the USIS segment increased 10.1% compared with the second quarter of 2013, with increases in revenue in all platforms.
- Excluding the impact of weakening foreign currencies and acquisitions, Emerging Market revenue increased by 8.2% compared with the second quarter of 2013.
- Adjusted EBITDA1 was $101.7 million, an increase of 7.7% compared with the second quarter of 2013, driven by broad-based revenue growth.
- On May 20, 2014, TransUnion acquired an additional 7.5% equity interest in Credit Information Bureau (India) Limited ("CIBIL"), increasing our ownership interest to 55%, resulting in consolidation of the results of operations of CIBIL as part of our International segment.
"In the second quarter, we generated strong revenue growth across all business segments driven by healthy organic growth in our International and Interactive segments and revenue from our recent acquisitions of eScan, TLO, and CIBIL, which are performing well and exceeding expectations," said Jim Peck, TransUnion's president and chief executive officer. "We are very excited about our majority stake in CIBIL, India's leading credit information company. Over the past 13 years, we have established a leading analytics and decisioning business in India and now we can further build on this foundation and better position one of our fastest growing and most dynamic markets for continued success. In addition, we have begun the implementation of the first phase of our technology upgrade and are already experiencing the benefits in terms of innovation, operational efficiency and a reduction in costs."
Second Quarter 2014 Results
The Company reported revenue of $327.5 million, an increase of 8.9% compared with the second quarter of 2013. Weakening foreign currencies accounted for a decrease in revenue of 1.6%. Acquisitions accounted for an increase in revenue of 6.5%.
Operating income was $32.4 million for the second quarter of 2014, compared with $39.5 million for the second quarter of 2013. The decrease in operating income was due primarily to an increase in depreciation and amortization associated with our recent acquisitions, an acceleration of $10.2 million of fees for a data matching service contract that we have terminated and in-sourced as part of the upgrade to our technology platform; integration costs associated with our recent acquisitions; and restructuring charges that will help drive long term earnings growth, partially offset by the increase in revenue. Excluding the fee acceleration for the data matching service contract, Adjusted Operating Income was $42.6 million for the second quarter of 2014, compared with $44.7 million for the second quarter of 2013. Adjusted Operating Income for the quarter ended June 30, 2013 included additions of $5.2 million, including a loss on the disposal of a small operating company in our International segment and a tax expense related to prior years that was recorded in our USIS segment and in Corporate.
Non-operating income was $1.8 million, compared with a non-operating expense of $47.5 million for the second quarter of 2013. Second quarter 2014 results include a net gain of $32.7 million resulting from the early redemption of the 11.375% notes and credit facility refinancing and a gain of $21.7 million resulting from re-measuring our previously held equity interest in CIBIL under the accounting guidance for acquisitions achieved in stages, along with an impairment charge of $4.5 million related to a cost-method investment that has sold its assets and is in the process of liquidating, among other items. Net income attributable to the Company was $17.9 million for the second quarter of 2014, compared with a net loss of $7.8 million for the second quarter of 2013.
Adjusted EBITDA1 was $101.7 million, an increase of 7.7% compared with the second quarter of 2013, driven by broad-based revenue growth.
Segment Highlights
U.S. Information Services (USIS)
Total USIS revenue was $206.8 million, an increase of 10.1% compared with the second quarter of 2013.
- Online Data Services revenue was $140.1 million, an increase of 6.1% compared with the second quarter of 2013, driven by our acquisition of TLO and slight increase in online credit report volume.
- Credit Marketing Services revenue was $32.4 million, an increase of 4.9% compared with the second quarter of 2013, due primarily to an increase in demand for custom data sets and archive information in the insurance market.
- Decision Services revenue was $34.3 million, an increase of 37.2% compared with the second quarter of 2013, driven by revenue from our acquisition of eScan Data Systems and other increases in the healthcare market.
Operating income for USIS was $26.5 million for the second quarter of 2014, compared with $37.3 million for the second quarter of 2013. The decrease in operating income was due primarily to an acceleration of $10.2 million of fees for a data matching service contract that we have terminated and in-sourced as part of the upgrade to our technology platform; integration costs associated with our recent acquisitions; and restructuring charges that will help drive long term earnings growth, partially offset by the increase in revenue.
International
International revenue was $63.2 million, an increase of 3.1% compared with the second quarter of 2013. Excluding the impact of foreign currencies and acquisitions, revenue increased 5.9%. Weakening foreign currencies accounted for a reduction in revenue of 7.8%, while acquisitions accounted for an increase in revenue of 5.1%.
- Developed markets revenue was $24.3 million, essentially flat when compared with the second quarter of 2013. Excluding the impact of foreign currencies, revenue increased 2.0% compared with the second quarter of 2013.
- Emerging markets revenue was $38.8 million, an increase of 5.4% compared with the second quarter of 2013. Excluding the impact of weakening foreign currencies and acquisitions, revenue increased by 8.2% compared with the second quarter of 2013.
Operating income for International was $4.7 million for the second quarter of 2014, compared with $4.1 million for the second quarter of 2013. Operating income was up slightly due to the increase in revenue, including revenue from our acquisitions of CIBIL and ZipCode, partially offset by integration costs from the recent acquisitions and the impact of weakening foreign currencies.
Interactive
Interactive revenue was $57.5 million, an increase of 11.4% compared with the second quarter of 2013, driven by an increase in the average number of subscribers and volume in our indirect channel.
Operating income for Interactive was $20.3 million for the second quarter of 2014, compared with $15.9 million for the second quarter of 2013. Operating income increased due to the increase in revenue.
Year-to-Date 2014 Results
The Company reported revenue of $630.9 million for the first six months of 2014, an increase of 6.7% compared with the first six months of 2013. Weakening foreign currencies accounted for a reduction in revenue of 1.8%. Acquisitions accounted for an increase in revenue of 5.9%.
- Revenue for U.S. Information Services was $400.9 million, an increase of 7.9% compared with the first six months of 2013.
- Revenue for International was $117.4 million, essentially flat when compared with the first six months of 2013. Excluding the impact of foreign currencies and acquisitions, revenue increased 6.2%. Weakening foreign currencies accounted for a reduction in revenue of 9.2%, while acquisitions accounted for an increase in revenue of 3.3%.
- Revenue for Interactive was $112.6 million, an increase of 9.6% compared with the first six months of 2013.
Operating income was $67.2 million for the first six months of 2014, compared with $83.6 million for the first six months of 2013. The decrease in operating income was due primarily to an increase in depreciation and amortization associated with our recent acquisitions, an acceleration of $10.2 million of fees for a data matching service contract that we have terminated and in-sourced as part of the upgrade to our technology platform; integration costs associated with our recent acquisitions; and restructuring charges that will help drive long term earnings growth, partially offset by the increase in revenue. Excluding the fee acceleration for the data matching service contract, Adjusted Operating Income was $77.4 million for the first six months of 2014, compared with $87.7 million for the first six months of 2013. Adjusted Operating Income for the first six months of 2013 included additions of $4.1 million of adjustments, including a loss on the disposal of a small operating company in our International segment, a gain on the disposal of a product line recorded in our USIS segment and a tax expense related to prior years that was recorded in our USIS segment and in Corporate.
Non-operating expense was $46.6 million for the first six months of 2014, compared with $97.6 million for the first six months of 2013. Year-to-date 2014 results include a net gain of $32.7 million resulting from the early redemption of the 11.375% notes and credit facility refinancing and a gain of $21.7 million resulting from re-measuring our previously held equity interest in CIBIL under the accounting guidance for acquisitions achieved in stages, along with an impairment charge of $4.5 million related to a cost-method investment that has sold its assets and is in the process of liquidating, among other items. Net income attributable to the Company was $3.2 million for the first six months of 2014, compared with a net loss attributable to the Company of $14.2 million for the first six months of 2013.
Adjusted EBITDA1 was $192.4 million, an increase of 3.1% compared with the first six months of 2013, driven by broad-based revenue growth.
Selected Liquidity Data
Cash and cash equivalents was $93.2 million at June 30, 2014, and $111.2 million at December 31, 2013. Year-to-date cash provided by operating activities was $45.6 million. Year-to-date capital expenditures were $74.3 million compared with $30.2 million in the first six months of 2013, due primarily to the upgrade of our technology platform and improvements to our corporate headquarters. Other cash used for investing activities included $54.8 million for acquisitions and purchases of noncontrolling interests, principally increasing our stake in CIBIL. Net cash provided by financing activities was $57.8 million due to an increase in net borrowings, partially offset by fees associated with the early redemption of the 11.375% notes and credit facility refinancing. The effect of exchange rate changes on cash was a $0.4 million decrease.
Earnings Conference Call
In conjunction with this release, TransUnion will host a conference call today, Aug. 7, 2014, at 8:00 a.m. (CT) via a teleconference to discuss the business trends supporting second 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:
Domestic dial-in: 877-474-9506
International dial-in: 857-244-7559
Teleconference code: 80504597
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 June 30, 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 reconciliation of Adjusted Operating Income & 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) | |||||||||
| June 30, 2014 | December 31, 2013 | ||||||||
| Unaudited | |||||||||
| Assets | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 93.2 | $ | 111.2 | |||||
| Trade accounts receivable, net of allowance of $1.1 and $0.7 | 193.0 | 165.0 | |||||||
| Other current assets | 71.7 | 73.5 | |||||||
| Total current assets | 357.9 | 349.7 | |||||||
| Property, plant and equipment, net of accumulated depreciation and amortization of $93.8 and $70.2 | 165.4 | 150.4 | |||||||
| Marketable securities | 13.9 | 9.9 | |||||||
| Goodwill | 2,012.6 | 1,909.7 | |||||||
| Other intangibles, net of accumulated amortization of $308.5 and $227.5 | 1,974.2 | 1,934.0 | |||||||
| Other assets | 109.7 | 138.6 | |||||||
| Total assets | $ | 4,633.7 | $ | 4,492.3 | |||||
| Liabilities and stockholders' equity | |||||||||
| Current liabilities: | |||||||||
| Trade accounts payable | $ | 107.0 | $ | 100.3 | |||||
| Short-term debt and current portion of long-term debt | 29.0 | 13.8 | |||||||
| Other current liabilities | 121.4 | 133.5 | |||||||
| Total current liabilities | 257.4 | 247.6 | |||||||
| Long-term debt | 2,874.5 | 2,853.1 | |||||||
| Deferred taxes | 661.5 | 636.9 | |||||||
| Other liabilities | 23.2 | 22.6 | |||||||
| Total liabilities | 3,816.6 | 3,760.2 | |||||||
| Redeemable noncontrolling interests | 17.8 | 17.6 | |||||||
| Stockholders' equity: | |||||||||
| Common stock, $0.01 par value; 200.0 million shares authorized at June 30, 2014 and December 31, 2013, 110.9 million and 110.7 shares issued at June 30, 2014 and December 31, 2013, respectively, and 110.4 million shares and 110.2 million shares outstanding as of June 30, 2014 and December 31, 2013, respectively | 1.1 | 1.1 | |||||||
| Additional paid-in capital | 1,126.2 | 1,121.8 | |||||||
| Treasury stock at cost; 0.5 million shares at June 30, 2014 and December 31, 2013, respectively | (4.2 | ) | (4.1 | ) | |||||
| Accumulated deficit | (414.5 | ) | (417.7 | ) | |||||
| Accumulated other comprehensive loss | (78.9 | ) | (73.2 | ) | |||||
| Total TransUnion Holding Company, Inc. stockholders' equity | 629.7 | 627.9 | |||||||
| Noncontrolling interests | 169.6 | 86.6 | |||||||
| Total stockholders' equity | 799.3 | 714.5 | |||||||
| Total liabilities and stockholders' equity | $ | 4,633.7 | $ | 4,492.3 | |||||
| TRANSUNION HOLDING COMPANY, INC. AND SUBSIDIARIES | |||||||||||||||||
| Consolidated Statements of Income (Unaudited) | |||||||||||||||||
| (in millions) | |||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||
| Revenue | $ | 327.5 | $ | 300.8 | $ | 630.9 | $ | 591.3 | |||||||||
| Operating expenses | |||||||||||||||||
| Cost of services (exclusive of depreciation and amortization below) | 132.4 |
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