易速傳真 (EFX) 2010 Q1 法說會逐字稿

Good day, everyone, and welcome to the Equifax first-quarter earnings release conference call.

Today's conference is being recorded.

At this time I would like to turn the conference over to Mr.

Jeff Dodge.

Please go ahead, sir.

Good morning and welcome to today's conference call.

I'm Jeff Dodge, Investor Relations.

And with me are Rick Smith, our Chairman and Chief Executive Officer, and Lee Adrean, Chief Financial Officer.

Today's call is being recorded.

An archive of the recording will be available later today in the investor relations section in the About Equifax tab of our website at www.Equifax.com.

During this call we will be making certain forward-looking statements to help you understand Equifax and its business environment.

These statements involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations.

Certain risk factors inherent in our business are set forth in filings with the SEC, including our 2009 Form 10-K and subsequent filings.

During this call, we will refer to certain non-GAAP financial measures, which are explained in the non-GAAP financial measures reconciliation attached to our earnings release, including adjusted net income and adjusted operating margins.

These measures exclude the $8.4 million restructuring charges that were reported in the first quarter of 2009.

Adjusted diluted EPS, a non-GAAP financial measure, includes the results of discontinued operations, but excludes the restructuring charge taken in the first quarter of 2009 and the acquisition-related amortization expense.

Please refer to the non-GAAP reconciliation section included in the earnings release and posted in the investor relations section under the About Equifax tab on our website for further details.

Now I would like to turn it over to Rick.

Thanks, Jeff.

Good morning, everyone.

Our first-quarter results were very encouraging.

We ended the quarter pretty much in line with our expectations, and we saw a strengthening in trends as the quarter progressed.

As for the numbers, the total revenue for the quarter was $461.3 million, up 3% on a reported basis and flat on a constant-dollar basis from the first quarter of last year.

The operating margin was 23.3%, up slightly when compared to the fourth-quarter adjusted operating margin of 23.2%.

Adjusted EPS was $0.56, which was in line with the outlook we gave during the fourth-quarter earnings release.

As I sit here today my optimism for the full year has improved, given how we ended the quarter and as four of our five business units delivered constant-dollar revenue growth over the prior year.

Here are some details.

First, on the Online Consumer Information Solutions operating margin were up slightly compared to the fourth quarter of 2009 as we continue to gain traction in some of our newer online products such as those focused on consumers' income and ability to pay; and I will talk about that in some detail later on.

Despite a 35% reduction in the mortgage application index, The Work Number verifications actually grew 5% during the quarter, due to strength in collections, government, and consumer finance.

The mortgage portion started slowly for The Work Number for six, seven weeks and then finished strong over the past -- the remaining four or five weeks of quarter, giving me confidence as we go into the second quarter.

Personal Solutions exceeded our expectations for both revenue growth and operating margin as its direct-to-consumer branded subscription business grew by over 13%.

Also, this quarter represents the first quarterly year-over-year growth since the third quarter of 2008, and the team has done a fantastic job on executing a number of changes in the experience that our online customers have.

The North American Commercial -- North America's Commercials, US commercial and risk marketing business, delivered strong double-digit growth as the business segment exceeded our expectations for both revenue growth and operating margin in the quarter.

International continued to make progress in many of its markets and met our expectations for revenue growth for the quarter.

We have talked many times about our four pillars of growth strategy.

One, increased share of customer spend; two, increased penetration of technology and analytical services; three, differential data that is unique from the competition; and four, expansion into key emerging markets and geographies.

I will talk about all four of those now.

As you know, to date, we have made some very important strategic acquisitions.

We have introduced a number of very unique products.

We have broadened many of our existing customer relationships and developed significant new customer relationships based on superior value of our products and services.

Today, I want to take you through some very real, live examples of how this strategy is playing out in the marketplace and with our customers and allowing us to gain market share.

We have coined the term the 360-degree view of the customer.

You have heard us talk about that in the past.

When we display the powerful insights our customers gain when they leverage the benefits of our employment, our income, our wealth, and our telco and utility data combined with our credit data, allowing them to make better decisions in an increasingly challenging competitive environment.

I'm going to walk you through now some specific examples of where we gained share over the first three months of 2010.

In the first quarter, we signed a multiyear deal worth $25 million to $30 million with a major insurance company, increasing our share of selected core product offerings from a very small share to 100%.

Although this customer had given the majority of their business to a competitor for over 15 years, who also countered with a lower price, we won this opportunity because we represented a stronger, longer-term business partner due to the diversity and quality of our data assets, the breadth of our decisioning platforms, and our superior analytic capabilities.

With our unique solutions, we can enable this customer to offer more competitive rates, approve customers who would otherwise have been rejected, reduce fraud through ID authentication and data verification, and improve their underwriting for small businesses.

Another example.

Again, by leveraging the most unique data assets in the industry, in the first quarter we increased our share of online credit reports from 25% to 50% in the key business units of a top four bank.

A current relationship includes products with eight Equifax business units including Online Consumer Information, IXI, Mortgage Reporting, Direct Marketing Services, The Work Number, North American Commercial, and Technology and Analytical Services -- truly overwhelming the customer with all of our product offerings.

The new opportunities include additional market share for our Work Number products, alerts, and our new personal income model which leverages both our diverse data assets as well as our analytical capabilities.

The power of this 360-degree view of the consumer is enabling us to expand our partnership with another top four bank.

In addition to our [Intertech] platform and our core services offerings, we are leveraging a broad array of newer products including The Work Number, Reg Z compliant income and credit capacity models, debt-to-income formulations, settlement services, and property valuation estimator.

Today, eight different Equifax business segments are also selling solutions to seven different business segments of this customer, where we have now the largest share on the credit-based information and solutions.

For a variety of special projects our Technology and Analytical Services unit has provided this customer with invaluable insight and counsel to improve their underwriting practices while enabling them to find new opportunities to grow revenue and profit.

Finally, and very exciting, we recently won an opportunity with a major Internet portal to help them determine what advertising content to display to consumers on the Internet.

With the IXI data, we will be their preferred partner for data-driven targeting on household economic information.

And we look to further enhance the benefits of the IXI data for this customer with income data at the ZIP-plus-four level.

Our unique data and capabilities enabled us to win this opportunity at a price more than 2 times what they are currently paying to our two competitors with lesser quality information.

In fact, many of the IXI's current clients strongly urged this portal to integrate IXI data into their online product offering.

Our new entree into this enormous digital marketing space looks very promising.

No one else in our industry has the ability to solve these increasingly complex problems that we can now solve with our unique data assets.

Technology and Analytical Services performs a critical support role for many of our 360-degree initiatives, domestically and internationally.

Our creative and innovative analytics continue to be highly valued by our customers.

Equifax scores delivered on a credit report have increased from just over 20% in the first quarter of 2008 to over 30% for the first quarter of 2010.

We're also leveraging our decisioning platforms on a global scale.

Interconnect was introduced in Canada, as you know, last year.

We have a number of signed deals and active customers in Canada coming into 2010.

And we have another large customer in the contract stage and a growing pipeline.

Interconnect is also being deployed in the UK where they already have one signed financial institution and are building a pipeline of new opportunities.

We are deploying a similar plan across our footprint in Latin America.

As you know, last year we really expanded the scope of what we call TAS, Technology and Analytical Services, to further leverage its expertise in the areas where the required solution is not solely dependent on Equifax data.

And that is a significant change from our past strategy where we sold our Technology and Analytical Services only to pull through data.

We are now looking at being data agnostic as it comes to those solutions.

We're increasing our investment in this area to develop new software solutions that will integrate analytics on customer information and on other various data assets that enable us to enter new markets, where we can leverage our decisioning software tools quickly, and develop a broader suite of products and capabilities in the areas of fraud, maximizing customer profitability, and improved portfolio management.

Now moving on to new product innovations, something we have talked to you about a lot over the past few years; this continues to gain significant traction for us.

We launched 12 new products during the quarter.

The revenue from products launched during the quarter -- during the prior three years, what we refer to as the vitality index, was $40 million in the first quarter of 2010.

That is up 29% from the first quarter of 2009.

Our long-term goal, as you know, is to have at least 10% of our revenues in each business unit generated by new products launched during the previous three years.

And we're well on our way to doing just that.

Also during the quarter, as you have read, we received a license from the Reserve Bank of India to operate a credit reporting business in India, along with six Indian financial institutions as our partners.

We have a CEO now on board in India and we are now soliciting and loading data from a number of financial institutions.

We expect to be fully operational over the coming few months.

Really view that as a great long-term growth opportunity for Equifax.

In global operations, we continue to make great progress with our LEAN initiatives.

Many of our customers ask us to develop joint process improvement initiatives using LEAN.

A great competitive differentiator for us.

We are further standardizing various tools and measures in our International operations to improve operating efficiencies and continue to reduce our costs outside of the US.

We continue to make significant progress on our key strategic initiatives and have a number of outstanding growth opportunities in front of us.

Our outlook for the second quarter is consistent with the outlook for many of our customers, which is one of growing optimism.

For the second quarter USCIS revenue is expected to be down in the low single-digit range when compared to the second quarter of 2009.

However, it will be up mid-single digits when compared to the first quarter of 2010.

We expect International revenue, excluding any impact of foreign currency translation, to be up in the low single digit range when compared to second quarter of 2009.

All three geographic regions are expected to deliver positive revenue growth in the second quarter.

The second-quarter TALX revenue is expected to deliver strong growth in the high single digit to mid-teen range.

Strength of The Work Number will be partially offset by expected softness in the Tax and Talent Management Services, as improvement in the job market lowers unemployment claims activity.

Personal Solutions should continue to show growth in the low single-digit range from the second quarter of 2009 as market conditions improve and transaction with our newer products increases, and our ability to execute the changes we have talked about the past six months really gain traction.

North American Commercial Solutions is again expected to deliver high single to low double-digit growth in the second quarter when compared to the second quarter of 2009.

So a good, solid performance expected across all five business units as we go into the second quarter.

So with that, I will stop and turn it over to Lee, who will give you the details on the financials.

Lee?

Thanks, Rick, and good morning, everyone.

This morning all financial information I will be discussing is presented on a GAAP basis except as otherwise noted, and treats APPRO as a discontinued operation given the recently completed sale of this business.

You should also refer to the Q&A and non-GAAP reconciliations attached to our earnings release for additional financial information.

As Rick has pointed out, our first-quarter performance was encouraging.

When compared to the fourth quarter of 2009, first-quarter 2010 revenue on a constant-dollar organic basis was up 6/10 of 1% from the fourth quarter.

This reverses modest sequential declines we had seen in the prior three quarters.

This quarter's performance reinforces our view that business conditions are beginning to improve and that our full-year outlook, as expressed in our fourth-quarter earnings release, remains appropriate.

Now for the details.

Compared to the same quarter in 2009, consolidated revenue of $461.3 million was up 3.3%.

Changes in foreign exchange rates favorably impacted revenue by approximately $14.8 million.

In constant dollars, revenue was flat.

The acquisition of IXI and Rapid Reporting in the fourth quarter of last year added approximately 3 percentage points of growth in the first quarter.

On a GAAP basis, the operating margin in the first quarter of 2010 was 23.3% compared to 22.6% in the first quarter of 2009.

On a non-GAAP basis, our first-quarter operating margin from continuing operations is down from the prior year, but comparable to the 23.2% we reported in the fourth quarter of 2009 after adjusting for the restructuring charges we recorded during that quarter.

Excluding the amortization of acquisition intangibles and the restructuring charge in Q1 of 2009, the adjusted operating margin in the first quarter was 28.3% versus 29% in the same period in 2009.

Diluted earnings per share from continuing operations attributable to Equifax for the quarter was $0.44.

Excluding the impact of acquisition-related intangible amortization, adjusted EPS attributable to Equifax was $0.56.

Total debt decreased by $26.3 million from December 31.

And during the quarter we repurchased 300,000 shares of stock for $9.4 million.

As of quarter end, our remaining authorization for share repurchase was $112 million.

Moving to the individual business units, U.S.

Consumer Information Solutions revenue was $191.4 million, down 6% for the quarter but slightly better than the expectations we communicated during our fourth-quarter earnings release.

Online Consumer Information Solutions revenue, which excludes discontinued operations, was $119.8 million, down 8.5% compared to 2009, primarily driven by a 15% decline in our online credit decision volume.

Average revenue per transaction was up 1%, as pricing gains with our smaller customers were offset by the negative impact of sector mix shift.

Mortgage Solutions revenue of $23.2 million was down 9% compared to the first quarter of 2009.

Although the mortgage bankers application index for the quarter was down 35%, core mortgage reporting and settlement services each significantly mitigated the impact of lower applications through share gains.

Consumer Financial Marketing Services revenue was $30.2 million.

Excluding the contribution from IXI, revenue was down approximately 11% due largely to lower pricing with our largest customers.

Direct Marketing Services revenue was $18.2 million, down 9% from the first quarter of 2009.

Operating margin for our U.S.

Consumer Information Solutions segment was 33.1%, down slightly from 33.4% in the fourth quarter of 2009; down 36.3% from the first quarter of 2009.

Our International business unit's revenue was $116.2 million compared to $100.8 million in the same quarter in 2009.

In local currency, revenue was up 1.6% from a year ago and consistent with the expectations we communicated during our fourth-quarter earnings release in early February.

By region, Latin America's revenue was $55.1 million, up 20% in US dollar terms and up 5% in local currency when compared to the same period in 2009.

Europe delivered revenue of $33.9 million, up 2% in US dollars and down 5% in local currency when compared to the same period in 2009.

While still reflective of the year-over-year weak economic conditions, this is Europe's best year-over-year local currency performance since September of 2008.

Canada Consumer information revenue was $27.2 million, up 25% in US dollars and 4% in local currency when compared to the same period a year ago.

Also, this was their best year-over-year local currency performance since June of 2008.

International's operating margin was 24.7%, down from 28.7% in 2009.

Lower online volumes, which represent our highest margin offerings, have been offset by growth in marketing projects and other services, allowing us to achieve revenue growth in a still challenging environment but putting downward pressure on operating margins.

As the business environment begins to recover in some of these international geographies, online volume should increase and we would expect operating margins to improve.

TALX revenue was $95.3 million for the quarter, up 8.4% from the first quarter of 2009, and short of the expectations we had previously communicated as the mortgage market proved to be more challenging than anticipated.

Excluding the acquisition of Rapid Reporting, revenue growth would have been flat.

The Work Number continues to deliver broad-based growth with revenue of $49.7 million, up 23%.

Excluding Rapid Reporting, The Work Number was up 5% as strength in government, collections, and consumer finance markets allowed us to achieve solid growth despite lower mortgage volumes and a weak labor market which impacted some of our complementary services.

Tax and Talent Management Services delivered $45.6 million in revenue, down 4% compared to last year, driven largely by the strong performance in 2009 and the year-over-year decline in unemployment compensation claims that we've experienced in 2010.

The TALX operating margin was 22.6%, up compared to 21.5% in 2009.

North America Personal Solutions revenue was $39.7 million, up 3% from the prior year, which was significantly better than the outlook we communicated in February.

Direct-to-consumer subscription revenue was up 13% year-over-year driven largely by a 10% increase in average revenue per subscriber.

Operating margin was 25.2% for the quarter, up from 15.5% a year ago as marketing expenses were lower than in the prior period.

North America Commercial Solutions revenue was $18.7 million, up 18% on a reported basis and 12% in local currency, driven by higher volume of transactions and project activity.

Revenue was substantially ahead of the expectations we communicated during our fourth-quarter earnings call in February.

US Commercial risk and marketing delivered very healthy double-digit growth as well as improved operating margins when compared to the first quarter of 2009.

Operating margin for the segment was 23.5% compared to 14.4% a year ago.

In summary, our first-quarter performance continues to gradually improve the outlook which we believe will enable us to deliver overall revenue growth in 2010.

Now lets me turn it back to Rick.

Thanks, Lee.

In closing, I would say I would summarize it this way.

We are moving through a period of stability.

I am gaining more confidence in our outlook for the back half of the year based upon recent activity levels and discussions with many of our customers.

In fact, we talk internally oftentimes -- I feel better about the outlook now of the prospects for growth than I have felt in probably three years, since mid-2007 when we entered the downturn.

So for the second quarter, assuming current exchange rates, we expect revenue to be up in the low to mid-single digit range from a year ago and adjusted EPS in the range of $0.55 to $0.59 a share.

So with that, operator, we would like to open it up for any Q&A our callers might have.

(Operator Instructions) Carter Malloy, Stephens.

Hey, guys.

Thanks for taking questions.

First of all, the volume and pricing trend was a little surprising.

Just to go back, you said in the quarter volume was down 15% and price was up 1%?

Yes.

For the rest of the year, I was kind of maybe looking at or expecting the opposite of that -- that being that, as the larger players get back in the market, we would see volume growth and maybe some pricing compression.

Do I have that backwards?

No, what you are seeing is we have been, as you know, driving strategic pricing which is segmentation, new products, for quite some time.

And we are getting the benefits of that.

We also have some mix from time to time going on, which will skew it.

But the 1% increase was a downdraft in revenue -- or in volume.

It is largely driven by (technical difficulty) last three or four years on strategic pricing.

Carter, I think you will also see as we go through the year the comparisons will shift some, because of the periods we are comparing to.

We saw continuing declines, fairly meaningful declines in volume through the first couple of quarters of last year.

So as we flattened out, we think we will start seeing a bit of growth.

You will start seeing an improvement in the volume comparisons.

To the extent that is driven by the very largest clients, you may see a little bit of pressure on pricing.

But we're also seeing good progression in some of our midmarket and smaller clients.

So that pricing will be maybe a little mixed.

Some pressure from the larger clients but good penetration from smaller clients.

But you will definitely see -- we expect that you will see improving volume comparisons as the year unfolds.

Okay.

Then on the marketing side of that business, down 11% ex-IXI because of pricing; but where volume is actually up in the prescreen piece of the business?

We did see volumes improving in the quarter.

I was under the impression that a lot of those were contractual obligations.

So just curious how you saw that much pricing decline in prescreening.

There was some -- the pricing changes really occurred mid-last year, so you are still anniversarying that effect.

Okay, okay.

That helps a lot.

Then you gave the breakup.

Can you give the actual revenues for IXI and Rapid Reporting?

We're not going to give them precisely.

I think the percentages get you close.

Yes, we gave you some indications, Carter, last year, or actually the first part of this, [they] will actually bottom what they would -- how they perform for the year.

And those expectations that we articulated postacquisition are accurate enough for you still to model accordingly.

Sure.

Okay.

That's great.

Lastly, on PSOL, what were the drivers there again?

(multiple speakers)

Yes, we have been -- it's not necessarily the market improvement.

We have been making a number of changes to the customer experience which are helping, which would increase things like conversion, lower churn, increase what we call ARPU, the revenue per unit.

And our subs are up slightly as well.

Okay.

That's great to hear.

Thanks.

Andrew Jeffrey, SunTrust.

Hi, good morning, guys.

Thanks for taking the question.

Rick, just to clarify, you said that you think International revenue is up low single digits year-on-year in the second quarter.

Is that right?

Yes.

Okay.

Could you elaborate on that a little bit?

That implies a pretty significant sequential downtick in revs.

Is that Europe?

It looked like Latin America had a pretty good quarter.

Where is the pressure on International revenue coming from in the second quarter versus the first?

I don't have those numbers in front of me.

Let me see if I can grab them real quick here.

Maybe there is some currency in there too.

I don't know.

That is just one piece.

Actually, Andrew, I don't have that at my fingertips.

Let me grab that and get back to you off-line.

Okay.

Just generally, directionally, do you feel like the mix starts to improve in the International business in the second quarter?

Yes, I would think what you are going to see -- and I'm not sure exactly in the second quarter or not.

But as we exit this year, it is our expectation that the online revenue from International starts to improve.

What you'll get is because of all of the cost actions we have taken over the past couple years, International is an improvement in net margin.

I can't promise you it is going to start in the second quarter.

But I expect it to improve as the year unfolds.

Okay.

Then in USCIS, the margin trends actually look pretty good, considering that the volume remains under considerable pressure.

To the extent that the first quarter was maybe the trough volume quarter, maybe the trough revenue quarter if the current trends persist, should we see that USCIS EBIT margin start to re-expand again?

And what kind of magnitude should we contemplate?

The answer is yes, you should.

Again for the same reasons internationally; we have taken so much cost out of that business.

We've improved processes, deployed LEAN.

I do view we have stability now in USCIS margin and revenue.

And I would expect to see improvement in margin throughout the balance of the year.

Andrew, incremental margin in that business is enormous.

Right.

When we start to get growth, you should see that over time drift back up from 33.5% or whatever up to the high 30s.

I can't promise you that takes place in the second quarter, but that is definitely the direction we are headed, is back up to the upper 30s.

Okay.

So the message really is we should be more concerned about a resurgence in volume because of the high incremental margins in that business than we should be worried about pricing.

Correct.

Okay.

Then last and I will pass it on to somebody else, the corporate expense line seemed to really make this quarter relative to my model and the Street.

What can we expect on corporate expense?

That has been a number that I am surprised by the extent to which you have been able to hold those expenses down.

I am just trying to get a sense of what the full year looks like there.

Andrew, you're right.

That line in the last two and a half or three years has fluctuated anywhere from $20 million to $29 million per quarter because it includes a number of items that can fluctuate period to period.

The $20.4 million in the first quarter was about the same as last year if you take last year's restructuring charge out.

But that is low compared to where we would expect it to run quarterly over the year.

I would suggest a range of kind of $25 million to $28 million a quarter is probably more representative.

But to make sure you got his point there, if you take the restructuring out last year, the corporate expense is basically flat year-on-year.

Right, okay.

Yes, I had missed the restructuring year-ago, so that makes a big difference.

Perfect.

Thanks a lot.

Andrew, by the way, I think on the International question, our guidance in the low single digits is constant dollars.

If you are looking at nominal dollars there is a significant effect of FX.

Could you just remind me?

I think you said it, Lee, what the FX contribution was in the first quarter?

It is in our Q&A.

I look at internal statements and measure against the different rates.

So it's a little hard for me from the (multiple speakers).

I will look at the Q&A in the press release.

So just to be clear then, we should be looking for reported or GAAP International revenue that is probably up nominally sequentially?

I would say comparable to up slightly on a constant-dollar basis.

Yes.

Great.

Thank you very much.

George Mihalos, Bank of America.

Hey, guys.

Thanks for taking the question.

Just to go back on the margin front, do you have an outlook for where you expect International margins to end up by the end of the year?

By the same token, given what would expect to be increased marketing spend, how should we think about the margins in the Personal Solutions business as the year progresses?

Yes, let me tackle the International piece first.

I think it was 24.7%, if my memory is correct, for the first quarter.

I would think that is kind of the trough, if you will, on margins, in the 24% range.

I do believe that -- I think it was Andrew or Carter -- that the second half of the year we will start to see online volume start to pick back up.

I would like to think of International over a period of time, George, being in the range of 24% to 27% and kind of sustainable at that level.

So I would expect it to improve as the year unfolds.

And for PSOL, you are absolutely right.

PSOL margins kind of ebb and flow based upon the investment we have in advertising.

I think about that as I have said before being in the -- the margins for the first quarter were 25%.

It fluctuates -- if you look at last year -- from 15% to 27%.

I would like to think of the margins of PSOL being 20% to 25%.

And you will have, again, different results based upon the timing of our advertising investment.

Okay, great.

Then just with regard to the CARD Act being recently implemented, what is the feedback you are getting from issuers?

Are you seeing more activity broad-based, or just from a handful of them as we think of the year progressing?

That is a good question, George.

I saw -- as we entered the first quarter, the trends of basically stagnation on solicitation continued.

And as we got into the middle part of the quarter, towards the end of the quarter, I became encouraged that a number of them -- and you know who some of those are -- became fairly aggressive in the solicitation, which gives me hope that that will continue in the second quarter.

As you know, it first impacts our marketing business then eventually goes to our online business, which we would expect to see a pickup as we exit the second quarter, go into the third quarter.

Okay, great.

Last questions for me.

Any benefit on the talent management side from the HIRE Act?

And is there any way you guys can break out the revenue growth in Brazil within Latin America?

We don't break out Brazil.

But yes, the HIRE Act is being a significant contributor to that P&L on top line and bottom line.

That is just starting, as you know, in the first quarter.

So that will be wind at their back the balance of the year.

Great.

Thanks, guys.

Shlomo Rosenbaum, Stifel Nicholas.

Thank you for taking my questions.

Just want to get a little more detail on your outlook, particularly in the OCIS business.

When do you expect to see some year-over-year stability in that?

Are we near the turning point over there?

Then also, should we start to see margins expand sequentially in this unit now?

Yes, again I think we're at the bottom in OCIS.

I would expect as the volume improves in the latter half of the year, yes -- you should expect to see margin expansion.

So should we expect kind of flattish margin and then expanding?

Is that that kind of in-line with you guys' expectations?

Yes, again, I can't predict exactly when the online improves.

But I would expect kind of flattish in the second quarter then starting to improve in third and fourth quarter.

Okay.

Then just you talked about sales strengthening in the quarter.

Could you give just more detail on which areas you are seeing the pickup intra-quarter?

And what kind of offerings and which geographies, just a little bit more about that.

I would say as far as the market goes, first, Shlomo, it was kind of broad-based.

Not just any one geography, but broad-based.

In particular in places like the US I would say what you saw was you saw some confusion in the mortgage market in the first part of the quarter.

The truth in lending standards were implemented, called RESPA.

The underwriters of mortgages had to change their programming, so on and so forth.

They were kind of paralyzed.

That really picked up strongly as we exited the quarter.

I mentioned just a minute ago that the credit card solicitation came in slow and then picked up in the back half of the quarter.

Then beyond all of that, if you recall some of the wins that I talked about in the opening discussion, a lot of those really closed in middle part of the quarter, which give us great energy as we go into the second and third quarter.

Okay.

Then just one last one.

As you talk about the wins and where you are picking up market share, are you feeling that IXI acquisition, some of the recent stuff you have done, are making a significant difference in the market share just in perspective, based on your pipeline?

Absolutely.

It is -- we have been talking now, Shlomo, for some time about this the 360-view of looking at the propensity and capacity and capability of someone to pay off a debt obligations, and with the income data, the wealth data, and a credit data every account we go into we talk about how we can help them solve problems.

It resonates and we are gaining share, which is exciting.

That bodes well for the future.

I can't underscore enough -- and I didn't talk about it in great detail -- that digital marketing space and our ability to help advertisers target through the Web, the portals, the right customers.

It is a huge space, and a lot of money spent every year in advertising.

No one can help them target like we can.

We can tell them here is the wealth data for the ZIP-plus-4, [7] households.

Here is the income data for ZIP-plus-4, and target your offerings accordingly.

Your hit rate is higher.

So yes, this data -- unique data assets that we have built over the past five years is helping us gain share.

Let me just sneak in one more.

In terms of the increased mail volumes, did I understand you right that you expect to see it start to impact OCIS in the latter part of 2Q and then going into 3Q?

Are you referring specifically to credit card solicitation?

Yes.

Yes, we are seeing at the end of the first quarter it was an increase in that solicitation.

Yes, that -- there tends to be about a 45-day lag roughly, between when you see a pickup in the marketing and you actually see a pickup in online.

So you'd expect to see that pickup in the second quarter.

Thank you.

Michael Meltz, JPMorgan.

Hey there.

Three questions for you.

Lee, you said in your prepared remarks you're tracking or comfortable with your -- I think you said the full-year outlook you gave back in February.

I don't recall a full-year outlook.

Can you tell us what that expectation is?

And then I have two follow-ups please.

Yes, the comment we made was we expected the first part of the year to be stable at levels consistent with the fourth quarter; and that we thought the second half of the year would show increasing growth.

If anything, we have seen some signs of that just slightly earlier than we had expected.

But it continues to cause us to believe that we will see strengthening trend through the year.

Okay.

But you're right, it was not -- it was that qualitative directional guidance.

Which I know so well.

On APPRO, could you just talk broadly, more broadly?

Are there other divestiture candidates that you are kicking around?

Or how are you thinking of the portfolio?

Then just by my maths, that looks like selling that will trim EPS this year by $0.02 to $0.03.

Is that fair?

Well, on the second part of your question, yes; directionally that is right.

It is semi-capital structure neutral, Michael, and there is obviously some things we can do if we so chose to mitigate some of that.

On the portfolio, yes; it's an annual exercise we go through.

Look at the portfolio, saying what is strategic, what is not.

We have no need to sell anything at this juncture.

However, it is always top of mind.

There are some assets out there -- and I can't really get in a lot of detail there Michael.

But there are some assets that are far less strategic than others, that if I found the right buyer at the right price I would sell those and redeploy that capital to things like acquisitions like IXI, Rapid Reporting, or others where our shareholders get a better return.

So that is a fluid process.

Okay.

Then last question for you.

Any thoughts you can offer, Rick, on regulatory?

We have seen the CARD Act come in; and that I think has probably been a modest positive.

But we're also hearing about potential for free score mandates.

There's lots of things happening with Personal -- that could impact Personal Solutions.

What else is out there and how are you viewing it in the context of your business?

Yes, it's something we spend a lot of time, obviously, in Washington, with our lobbyists looking at and thinking about.

As I think about the current period of things that have impacted us, you are right.

The CARD Act is a net positive.

I think RESPA over a period of time has virtually no impact to us.

It just caused some disruption in the first quarter.

The FTC on the score and maybe the advertising approach that one of our competitors took had some impact on us in the first quarter.

The team has done a marvelous job of trying to navigate can get through that.

Beyond that, it is uncertain as to what regulatory body is going to oversee us.

Is it going to be the FTC or this new consumer protection agency or some combination of both?

As I look at the financial model for us right now in 2010, 2011, while there is a lot of movement I see nothing that says that the financial model of Equifax is going to be impacted in any significant way at all.

Okay.

Thank you for your time.

Dan Leben, Robert W.

Baird.

Great.

Thanks.

Could you talk a little bit about how the mix of lenders has changed over time?

Not just necessarily quarter-to-quarter.

From kind of the larger banks versus the regionals versus the smaller community banks?

Yes, I would say that what you're seeing is -- and I kind of highlighted it there, obviously the big banks dominate the landscape.

Our whole approach there with the restructuring we announced last year is to gain share.

I gave you some examples of how we doing exactly that by leveraging unique data.

So they are a very important piece of our business, the big four.

They were important last year, they are going to be more important for us this year and next year.

I plan to be a bigger player in those four.

Then we have got, I think, a world-class organization here that focuses on the small lenders across the US.

I think someone mentioned earlier that was actually a growing segment.

I think Lee did.

That is a growing segment in the first quarter of our business.

So we're not going to focus on just one of the two segments.

We're going to focus on growing the big four relationships and also growing our share of wallet with the small lenders as well.

Just from a historical perspective, what would the mix have looked like compared to today if we looked back to, say, '06 or '07?

Our revenue with -- I don't have that.

You can get that.

Jeff can get that to you.

I would be guessing if I gave you a number right now.

Okay, great.

Then just on the Commercial Solutions business, very strong quarter there.

Could you give us a sense of how much of that was market share gains versus some follow-through on volumes from some of the projects you did last quarter?

We're gaining share.

It's clear, we are gaining share.

We are introducing new products.

We have been over the last three or four years building out our nonfinancial trade database, and that is paying dividends.

Now is this more on the project side or on the transactional recurring side?

Both.

Okay, great.

Thanks, guys.

At this time I will turn the conference back to Mr.

Dodge for any additional remarks.

Okay.

We would like to thank everybody for their participation and we will be around to handle any questions.

Thanks, everybody.

With that, we will conclude the call.

Thank you.

A replay of this call will be available starting today, April 29th, 2010, at 10.30 a.m.

Central Time and run through May 6, 2010, at 10.30 a.m.

Central Time.

To access this replay, dial 719-457-0820 or 888-203-1112 and reference pass code 416-6831.

This concludes today's conference call.

Thank you for your participation.