Equifax Inc. announced financial results for the quarter ended March 31, 2019.

"In the first quarter, Equifax made positive steps forward with customers and partners while continuing to invest significantly to transform our technology to the public cloud. Our incremental investment of $1.25 billion from 2018 through 2020 in technology and security will accelerate the expansion of our data assets and analytics capabilities, increase the speed of new products to market, enhance our data security, and reduce our costs," said Mark W. Begor, Chief Executive Officer of Equifax. "We also continue to make progress to resolve the litigation and regulatory matters related to the 2017 cybersecurity incident. During the quarter, we took a $690 million charge that includes our estimate of losses we expect to incur in connection with a potential global resolution of the consumer class action cases and the investigations by certain federal and state regulators."

Financial Results Summary

The company reported revenue of $846.1 million in the first quarter of 2019, down 2 percent compared to the first quarter of 2018 and up 1 percent on a local currency basis.

Net loss attributable to Equifax of $555.9 million was down compared to net income attributable to Equifax of $90.9 million in the first quarter of 2018.

First quarter diluted EPS attributable to Equifax was a loss of $4.57, down compared to income of $0.75 in the first quarter of 2018.

Our results in the first quarter of 2019 included a pre-tax legal accrual of $690.0 million for losses associated with certain legal proceedings and investigations related to the 2017 cybersecurity incident. The impact of this accrual on diluted EPS was $4.88 per share. Please see Part II, "Item 1. Legal Proceedings" in our Form 10-Q for the first quarter of 2019 for more information.

USIS first quarter results

Total revenue was down 3 percent at $298.3 million in the first quarter of 2019 compared to $306.9 million in the first quarter of 2018. Operating margin for USIS was 32.2 percent in the first quarter of 2019 compared to 36.1 percent in the first quarter of 2018. Adjusted EBITDA margin for USIS was 42.9 percent in the first quarter of 2019 compared to 44.1 percent in the first quarter of 2018.

Online Information Solutions revenue was $217.7 million, down 1 percent compared to the first quarter of 2018.

Mortgage Solutions revenue was $32.2 million, down 23 percent compared to the first quarter of 2018.

Financial Marketing Services revenue was $48.4 million, up 6 percent compared to the first quarter of 2018.

International first quarter results

Total revenue was $225.1 million in the first quarter of 2019, down 8 percent and up 2 percent compared to the first quarter of 2018 on a reported and local currency basis, respectively. Operating margin for International was 5.0 percent in the first quarter of 2019, compared to 15.0 percent in the first quarter of 2018. Adjusted EBITDA margin for International was 25.3 percent in the first quarter of 2019, compared to 29.4 percent in the first quarter of 2018.

Asia Pacific revenue was $73.1 million, down 11 percent compared to the first quarter of 2018 and down 3 percent on a local currency basis.

Europe revenue was $68.5 million, down 3 percent compared to the first quarter of 2018 and up 4 percent on a local currency basis.

Latin America revenue was $47.2 million, down 16 percent compared to the first quarter of 2018 and up 5 percent on a local currency basis.

Canada revenue was $36.3 million, up 2 percent compared to the first quarter of 2018 and up 8 percent on a local currency basis.

Workforce Solutions first quarter results

Total revenue was $228.5 million in the first quarter of 2019, an 8 percent increase compared to the first quarter of 2018. Operating margin for Workforce Solutions was 42.1 percent in the first quarter of 2019 compared to 42.7 percent in the first quarter of 2018. Adjusted EBITDA margin for Workforce Solutions was 49.4 percent in the first quarter of 2019 compared to 48.9 percent in the first quarter of 2018.

Verification Services revenue was $148.9 million, up 16 percent compared to the first quarter of 2018.

Employer Services revenue was $79.6 million, down 4 percent compared to the first quarter of 2018.

Global Consumer Solutions first quarter results

Revenue was $94.2 million in the first quarter of 2019, down 9 percent and 8 percent compared to the first quarter of 2018 on a reported and local currency basis, respectively. Operating margin was 12.1 percent in the first quarter of 2019 compared to 29.2 percent in the first quarter of 2018. Adjusted EBITDA margin was 23.9 percent compared to 33.8 percent in the first quarter of 2018.

Adjusted EPS and Adjusted EBITDA Margin

Adjusted EPS attributable to Equifax was $1.20 in the first quarter of 2019, down 16 percent compared to the first quarter of 2018. This financial measure for 2019 excludes the foreign currency impacts from Argentina being a highly inflationary economy, expenses related to the realignment of internal resources, and an accrual for legal matters related to the 2017 cybersecurity incident. The financial measure for both 2019 and 2018 excludes cybersecurity incident related costs, acquisition-related amortization expense, net of associated tax impacts, and income tax effects of stock awards recognized upon vesting or settlement. These items are described more fully in the attached Q&A.

Adjusted EBITDA margin was 30.5 percent in the first quarter of 2019 compared to 33.5 percent in the first quarter of 2018. This financial measure for 2019 and 2018 has been adjusted for certain items, including costs related to the cybersecurity incident, expenses related to the realignment of internal resources, and an accrual for legal matters related to the 2017 cybersecurity incident as well as the foreign currency impacts from Argentina being a highly inflationary economy, which affect the comparability of the underlying operational performance and are described more fully in the attached Q&A.

Second Quarter and Full Year Guidance

For the second quarter of 2019, we expect reported revenue to be between $865 and $880 million, reflecting local currency growth as compared to the second quarter of 2018 of 0.5% to 2.5%, partially offset by an expected 2.5% negative impact of foreign exchange. Adjusted EPS is expected to be between $1.32 and $1.37 per share. The impact of foreign exchange on adjusted EPS compared to the second quarter of 2018 is expected to be negative $0.035 per share.

We expect full year 2019 reported revenue to be between $3.425 and $3.525 billion, reflecting local currency growth of 2% and 5% compared to 2018, partially offset by an expected just over 2% negative impact of foreign exchange. Adjusted EPS is expected to be between $5.60 and $5.80 per share. The impact of foreign exchange on adjusted EPS compared to 2018 is expected to be negative $0.12 per share. Factors impacting 2019 revenue and adjusted EPS include an expected approximate 2% decline in mortgage market inquiries, and higher Corporate costs principally for security and related technology spend.