TransUnion Reports Third Quarter 2013 Results
CHICAGO, IL--(Marketwired - Nov 13, 2013) - TransUnion today announced results for the three and nine months ended Sept. 30, 2013. 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).
Third Quarter 2013 Highlights
- Total revenue for the third quarter increased 2.7 percent compared to the third quarter of 2012. Weakening foreign currencies accounted for a decrease in revenue of 1.9 percent, while acquisitions accounted for an increase in revenue of 1.1 percent. Key highlights include:
- Revenue in the Interactive segment increased 10.5 percent compared to the third quarter of 2012, driven by an increase in the average number of subscribers and volume in our indirect channel and an increase in our average revenue per subscriber in our direct channel.
- Revenue in USIS Decision Services increased 10.0 percent compared to the third quarter of 2012, driven by revenue from our recent healthcare acquisition of eScan and organic growth in the healthcare market.
- Excluding the impact of foreign currencies and acquisitions, revenue in the International segment increased 8.4 percent compared to the third quarter of 2012.
- Revenue in the Interactive segment increased 10.5 percent compared to the third quarter of 2012, driven by an increase in the average number of subscribers and volume in our indirect channel and an increase in our average revenue per subscriber in our direct channel.
- Adjusted EBITDA(2) was $99.5 million, a decrease of 6.1 percent compared to the prior year, due to investments in new initiatives to drive long-term revenue growth and more efficient operations.
- On September 4, 2013, TransUnion completed the acquisition of e-Scan Data Systems Inc. ("eScan"). eScan provides services to hospitals and healthcare providers to efficiently capture uncompensated care costs in their revenue management cycle programs. eScan will be integrated into TransUnion's healthcare business.
"In the third quarter, we generated revenue growth across all business segments while we continue to invest in strategic initiatives and new technology that will enable future top and bottom line growth, promote innovation and provide a competitive advantage," said Jim Peck, TransUnion's president and chief executive officer. "We are excited about our recent acquisition of eScan, a strategic investment that will further diversify and strengthen our current healthcare offerings. These near-term investments will drive long-term growth and value creation."
Third Quarter 2013 Results
The Company reported revenue of $299.5 million, an increase of 2.7 percent compared to the third quarter of 2012. Weakening foreign currencies accounted for a decrease in revenue of 1.9 percent. Acquisitions accounted for an increase in revenue of 1.1 percent.
Operating income was $49.3 million for the third quarter of 2013, compared to $61.3 million for the third quarter of 2012. The Company reported a net loss of $3.4 million for the third quarter of 2013, compared to net income of $11.3 million for the third quarter of 2012.
Adjusted EBITDA(2) was $99.5 million, a decrease of 6.1 percent compared to the prior year.
Segment Highlights
U.S. Information Services (USIS)
Total USIS revenue was $188.3 million, an increase of 1.2 percent compared to the third quarter of 2012.
- Online Data Services revenue was $129.3 million, an increase of 0.7 percent compared to the third quarter of 2012, driven by an increase in average pricing and a slight increase in online credit report volumes.
- Credit Marketing Services revenue was $31.5 million, a decrease of 3.7 percent compared to the third quarter of 2012, due primarily to a decrease in demand for custom data sets and archive information.
- Decision Services revenue was $27.5 million, an increase of 10.0 percent compared to the third quarter of 2012, driven by revenue from our acquisition of eScan and organic growth in our healthcare business.
Operating income for USIS was $41.9 million for the third quarter of 2013, compared to $47.5 million for the third quarter of 2012.
International
Total International revenue was $60.6 million, an increase of 1.3 percent compared to the third quarter of 2012. Excluding the impact of foreign currencies and acquisitions, revenue increased 8.4 percent. Weakening foreign currencies accounted for a reduction in revenue of 9.2 percent. Acquisitions accounted for an increase in revenue of 2.2 percent.
- Developed markets revenue was $24.6 million, an increase of 7.9 percent compared to the third quarter of 2012. Excluding the impact of foreign currencies, revenue increased 10.8 percent compared to the third quarter of 2012.
- Emerging markets revenue was $36.0 million, a decrease of 2.7 percent compared to the third quarter of 2012. Excluding the impact of weakening foreign currencies, revenue increased by 12.1 percent compared to the third quarter of 2012.
Operating income for International was $9.0 million for the third quarter of 2013, compared to $9.9 million for the third quarter of 2012.
Interactive
Interactive revenue was $50.6 million, an increase of 10.5 percent compared to the third quarter of 2012, driven by an increase in the average number of subscribers and volume in our indirect channel and an increase in our average revenue per subscriber in our direct channel.
Operating income for Interactive was $16.7 million for the third quarter of 2013, compared to $20.4 million for the third quarter for 2012.
Year-to-Date 2013 Results
The Company reported revenue of $890.8 million for the first nine months of 2013, an increase of 4.1 percent compared to the first nine months of 2012. Weakening foreign currencies accounted for a reduction in revenue of 1.5 percent. Acquisitions accounted for an increase in revenue of 0.9 percent.
- Revenue for U.S. Information Services was $560.0 million, an increase of 2.3 percent compared to the first nine months of 2012.
- Revenue for International was $177.5 million, an increase of 2.1 percent compared to the first nine months of 2012. Excluding the impact of foreign currencies and acquisitions, revenue increased 6.4 percent compared to the first nine months of 2012. Weakening foreign currencies accounted for a reduction in revenue of 7.4 percent. Acquisitions accounted for an increase in revenue of 3.0 percent.
- Revenue for Interactive was $ 153.3 million, an increase of 14.2 percent compared to the first nine months of 2012.
Operating income was $132.9 million for the first nine months of 2013, compared to $97.6 million for the first nine months of 2012. The first nine months of 2012 was adversely impacted by $90.6 million of 2012 Change in Control Transaction related expenses. Conversely, the first nine months of 2013 was impacted by a $2.9 million one-time adjustment for a transaction tax related to prior years and a net $1.2 million loss associated with the disposition of a small business in Africa and small product line in our USIS segment. Excluding these items, Adjusted Operating Income was $137.0 million for the first nine months of 2013, compared to $188.2 million for the first nine months of 2012. This comparison was negatively impacted by $37.2 million of additional depreciation and amortization, primarily resulting from purchase accounting adjustments related to the 2012 Change of Control Transaction.
Adjusted EBITDA was $286.1 million, a decrease of 3.4 percent compared to the first nine months of 2012, due to investments in new initiatives to drive long-term revenue growth and bottom-line savings.
Non-operating expense was $144.3 million for the first nine months of 2013, compared to $155.8 million for the first nine months of 2012. The first nine months of 2013 included a $30.2 million increase in interest expense related primarily to the issuance of $600 million and $400 million principal amount of senior unsecured PIK toggle notes in the second and fourth quarters of 2012, respectively. The first nine months of 2012 included $41.9 million of acquisition fees related primarily to the 2012 Change in Control Transaction. These factors contributed to a net loss attributable to the Company of $17.5 million for the first nine months of 2013, compared to a net loss attributable to the company of $55.5 million for the first nine months of 2012.
Selected Liquidity Data
Cash and cash equivalents was $117.5 million at September 30, 2013, and $154.3 million at December 31, 2012. Year-to-date cash provided by operating activities of TransUnion Holding was $111.1 million. Other year-to-date cash activity of TransUnion Holding included: $54.1 million used for cash capital expenditures; $138.4 million used for other investing activities; $49.9 million used for financing activities; and $5.3 million due to the effect of exchange rate changes on cash.
Recent Developments
Registration of 8.125%/8.875% Senior PIK Toggle Notes due 2018
On August 15, 2013, TransUnion Holding Company announced that 100% of aggregate principal amount of outstanding unregistered 8.125%/8.875% Senior PIK Toggle Notes due 2018, Series A were validly tendered for an equal principal amount of a new issue of registered 8.125%/8.875% Senior PIK Toggle Notes due 2018, Series B. Terms of the new issue are substantially identical to those of the original notes, except that the transfer restrictions and registration rights relating to the original notes do not apply to the new issue.
Earnings Conference Call
In conjunction with this release, TransUnion will host a conference call today, Nov. 13, 2013, at 8:00 a.m. (CT) via a live teleconference to discuss the business trends supporting third quarter 2013 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: 877-415-3177
International dial-in: 857-244-7320
Teleconference code: 57853852
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 and Form 10-Q for the quarter ended September 30, 2013. 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.
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 present the TransUnion Holding consolidated results for the nine months ended September 30, 2013, and compare this to the combination of TransUnion Holding consolidated results from inception through September 30, 2012 combined with the TransUnion Corp Predecessor consolidated results for the four months ended April 30, 2012, (combined results for the nine months ended September 30, 2013). 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.
| TRANSUNION HOLDING COMPANY, INC. AND SUBSIDIARIES | |||||||||
| Consolidated Balance Sheets | |||||||||
| (in millions, except per share data) | |||||||||
| September 30, 2013 | December 31, 2012 | ||||||||
| Unaudited | |||||||||
| Assets | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 117.5 | $ | 154.3 | |||||
| Trade accounts receivable, net of allowance of $0.9 and $1.7 | 183.7 | 163.6 | |||||||
| Other current assets | 63.9 | 82.7 | |||||||
| Total current assets | 365.1 | 400.6 | |||||||
| Property, plant and equipment, net of accumulated depreciation and amortization of $59.0 and $26.4 | 125.2 | 121.2 | |||||||
| Other marketable securities | 11.6 | 11.4 | |||||||
| Goodwill | 1,855.4 | 1,804.2 | |||||||
| Other intangibles, net of accumulated amortization of $190.6 and $86.6 | 1,882.2 | 1,911.6 | |||||||
| Other assets | 135.5 | 129.8 | |||||||
| Total assets | $ | 4,375.0 | $ | 4,378.8 | |||||
| Liabilities and stockholders' equity | |||||||||
| Current liabilities: | |||||||||
| Trade accounts payable | $ | 82.3 | $ | 78.4 | |||||
| Current portion of long-term debt | 76.1 | 10.6 | |||||||
| Other current liabilities | 130.7 | 129.3 | |||||||
| Total current liabilities | 289.1 | 218.3 | |||||||
| Long-term debt | 2,650.5 | 2,670.3 | |||||||
| Other liabilities | 678.1 | 679.4 | |||||||
| Total liabilities | 3,617.7 | 3,568.0 | |||||||
| Redeemable noncontrolling interests | 18.5 | 14.7 | |||||||
| Stockholders' equity: | |||||||||
| Common stock, $0.01 par value; 200.0 million shares authorized at September 30, 2013, 110.3 million and 110.2 million shares issued at September 30, 2013 and December 31, 2012, respectively, and 109.9 million shares and 110.1 million shares outstanding as of September 30, 2013 and December 31, 2012, respectively | 1.1 | 1.1 | |||||||
| Additional paid-in capital | 1,116.0 | 1,109.4 | |||||||
| Treasury stock at cost; 0.5 million shares at September 30, 2013 and 0.1 million shares at December 31, 2012 | (3.7 | ) | (0.7 | ) | |||||
| Accumulated deficit | (400.1 | ) | (382.6 | ) | |||||
| Accumulated other comprehensive loss | (64.4 | ) | (24.4 | ) | |||||
| Total TransUnion Holding Company, Inc. stockholders' equity | 648.9 | 702.8 | |||||||
| Noncontrolling interests | 89.9 | 93.3 | |||||||
| Total stockholders' equity | 738.8 | 796.1 | |||||||
| Total liabilities and stockholders' equity | $ | 4,375.0 | $ | 4,378.8 | |||||
| TRANSUNION HOLDING COMPANY, INC. AND SUBSIDIARIES | |||||||||||||||||
| Consolidated Statements of Income (Unaudited) | |||||||||||||||||
| (in millions) | |||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | From the Date of Inception Through September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||||
| Revenue | $ | 299.5 | $ | 291.7 | $ | 890.8 | $ | 482.6 | |||||||||
| Operating expenses | |||||||||||||||||
