Equifax Inc. announced financial results for the quarter and full year ended December 31, 2017.

"Our fourth quarter results underscore solid progress on multiple fronts," said Paulino Barros, Interim Chief Executive Officer at Equifax. "We invested heavily in advancing our data security infrastructure and improving our consumer support, and we delivered on our financial commitments. While the job is not over, I believe we have responded well thanks to the strong support of our Board of Directors, the commitment of our Senior Leadership team, outside partners, and the dedication of our 10,000+ employees around the world. There will be a lot of heavy lifting in 2018 and 2019 as we implement new data security initiatives and restore confidence with our customers and consumers. The DNA of this company is underpinned with both a deep commitment to strong ethical principles and values and a strong focus on execution. As I have met with our employees throughout the world, I sense a great level of enthusiasm and commitment to move this company forward with a heightened level of focus on protecting and safeguarding all of the consumer and commercial information we store and manage."

Financial Results Summary

The company reported revenue of $838.5 million in the fourth quarter of 2017, a 5 percent increase from the fourth quarter of 2016 and a 4 percent increase in local currency.

Fourth quarter diluted EPS attributable to Equifax was $1.42, an increase of 40 percent as compared to the fourth quarter of 2016. 

Net income attributable to Equifax of $172.3 million was up 40 percent compared to the fourth quarter of 2016.

For the full year 2017, revenue was $3.4 billion, a 7 percent increase from 2016. Diluted EPS attributable to Equifax was $4.83, a 20 percent increase from the prior year. Net income attributable to Equifax of $587.3 million was up 20 percent compared to the full year 2016.

Costs Related to the Cybersecurity Incident

During the fourth quarter and twelve months ended December 31, 2017, the Company recorded expenses, net of insurance recoveries, of $26.5 million and $114.0 million, respectively, related to the cybersecurity incident announced in September of 2017.

USIS fourth quarter results

• Total revenue was $313.0 million in the fourth quarter of 2017 a decrease of 1 percent from the fourth quarter of 2016. Operating margin for USIS was 41.6 percent in the fourth quarter of 2017, compared to 44.5 percent in the fourth quarter of 2016. Adjusted EBITDA margin for USIS was 48.5 percent in the fourth quarter of 2017 compared to 51.0 percent in the fourth quarter of 2016.

• Online Information Solutions revenue was $210.9 million, flat from a year ago.

• Mortgage Solutions revenue was $32.8 million, a decrease of 9 percent from a year ago.

• Financial Marketing Services revenue was $69.3 million, an increase of 1 percent when compared to a year ago.

International fourth quarter results

• Total revenue was $244.8 million in the fourth quarter of 2017, an increase of 15 percent from the fourth quarter of 2016 and an increase of 12 percent on a local currency basis. Operating margin for International was 16.6 percent in the fourth quarter of 2017 compared to 15.1 percent in the fourth quarter of 2016. Adjusted EBITDA margin for International was 28.3 percent in the fourth quarter of 2017 compared to 30.3 percent in the fourth quarter of 2016.

• Asia Pacific revenue was $79.2 million, up 12 percent from the fourth quarter of 2016 and up 10 percent on a local currency basis.

• Europe revenue was $74.5 million, up 17 percent from the fourth quarter of 2016 and up 9 percent on a local currency basis.

• Latin America revenue was $55.2 million, up 16 percent from the fourth quarter of 2016 and up 19 percent on a local currency basis.

• Canada revenue was $35.9 million, up 18 percent from the fourth quarter of 2016 and up 12 percent on a local currency basis.

Workforce Solutions fourth quarter results

• Total revenue was $183.4 million in the fourth quarter of 2017, a 6 percent increase from the fourth quarter of 2016. Operating margin for Workforce Solutions was 39.9 percent in the fourth quarter of 2017 compared to 39.5 percent in the fourth quarter of 2016. Adjusted EBITDA margin for Workforce Solutions was 45.5 percent in the fourth quarter of 2017, compared to 45.8 percent in the fourth quarter of 2016.

• Verification Services revenue was $126.3 million, up 11 percent when compared to a year ago.

• Employer Services revenue was $57.1 million, down 5 percent when compared to a year ago.

Global Consumer Solutions fourth quarter results

• Revenue was $97.3 million, a 2 percent decrease from the fourth quarter of 2016 as well as on a local currency basis. Operating margin was 23.9 percent compared to 32.1 percent in the fourth quarter of 2016. Adjusted EBITDA margin was 32.4 percent compared to 34.5 percent in the fourth quarter of 2016.

Tax Cut and Jobs Act of 2017

• The Tax Cuts and Jobs Act of 2017 ("Tax Act"), as signed by the President of the United States on December 22, 2017, significantly revises U.S. tax law. The legislation will positively impact the Company's ongoing effective tax rate due to the reduction of the U.S. federal corporate tax rate from 35 percent to 21 percent. As a result of the Tax Act, the company recorded one-time adjustments totaling a net tax benefit of $48.3 million in the fourth quarter of 2017. Given the substantial changes to the Internal Revenue Code as a result of the 2017 Tax Act, the estimated financial impacts for the fourth quarter and the full year 2017 are provisional and subject to further analysis, interpretation and clarification of the act, which could result in changes to these estimates in 2018.

Adjusted EPS and Adjusted EBITDA Margin

• Adjusted EPS attributable to Equifax was $1.39, down 2 percent compared to the fourth quarter of 2016. This financial measure for 2017 excludes cybersecurity incident related costs, the impact of tax legislation enacted in 2017, and the income tax effects of stock awards recognized upon vesting or settlement. The financial measure for 2016 excludes Veda acquisition related amounts other than acquisition-related amortization, an accrual for certain legal claims and realignment of internal resources and other costs. The financial measure for both 2017 and 2016 excludes acquisition-related amortization expense of certain acquired intangibles. These items are net of associated tax impacts and are described more fully in the attached Q&A.

• Adjusted EBITDA margin was 34.8 percent, compared to 36.5 percent in the fourth quarter of 2016. These financial measures for 2017 and 2016 have been adjusted for certain items, including 2017 costs related to the cybersecurity incident, which affect the comparability of the underlying operational performance and are described more fully in the attached Q&A.

• Full year adjusted EPS attributable to Equifax was $5.97, up 8 percent from the prior year period. Full year adjusted EBITDA margin was 36.8 percent compared to 35.8 percent in 2016. These financial measures for 2017 and 2016 have been adjusted for certain items, including 2017 costs related to the cybersecurity incident, which affect the comparability of the underlying operational performance and are described more fully in the attached Q&A.