易速傳真 (EFX) 2010 Q2 法說會逐字稿

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

Today's call is being recorded.

At this time I'd 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 with investor relations and with me today are Rick Smith, our Chairman and Chief Executive Officer, and Lee Adrian, Chief Financial Officer.

Today's call is being recorded.

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

During this call, we'll 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.

Also, we will refer to a non-GAAP financial measure, which we call adjusted diluted EPS attributable to Equifax, which for this report includes the operating results of discontinued operations but not the impact of acquisition-related amortization expense and the gain on the sale of our APPRO product line.

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.

Now I'd like to turn it over to Rick.

Great.

Thanks, Jeff, and good morning, everyone.

Second quarter for Equifax was the strongest quarter we've had in a number of years.

But more importantly than that, we're carrying very strong momentum, growth momentum, operating momentum as we enter into the third and fourth quarters.

I'll talk more about that later on in the discussion.

The second quarter came in stronger than we expected.

Four business units exceeded and USCIS solidly met the expectations that we outlined for you during our first-quarter earnings call.

And while at the macro level the environment continued to be challenging, I think you'd agree, I am, again, very optimistic that we'll continue to see continued year-over-year improvements for the remainder of 2010.

The numbers, quickly.

The revenue from continuing operations for the quarter was $460.7 million, up 7% on a reported basis and up 6% on a constant dollar basis in the second quarter of 2009.

Operating margin was solid at 23% when compared to the first-quarter margin of 23.5% and EPS -- adjusted EPS was $0.58 a share, up from last year and first quarter.

Overall a strong quarter for the Company.

Although each business unit in their own way faced its own challenges and their own opportunities, they all improved as the quarter progressed and have built a solid pipeline of opportunities for the third quarter.

And again, the important point there is as the quarter progressed each of the business units finished stronger than they started the quarter.

A quick look at each of the individual BUs.

In US Consumer Information Solutions, daily online revenue has strengthened since the beginning of the year, which is a great trend.

As we ended the quarter, aggregate revenue from accounts with increasing revenue exceeded the aggregate revenue for those accounts with decreasing revenue, the first time since January of 2009.

Additionally, our revenue from prescreened services was up 6%, the first year-over-year growth since the first quarter of 2007 and, again, the sequential growth also for USCIS second quarter versus first quarter showed strong growth the first time I think since 2007 as well.

Operating margin for USCIS also improved.

For the second quarter, USCIS delivered significant improvement in operating margin from the first quarter, exceeding 37%, driven largely by increases in our Credit Marketing Services product line and our mortgages solutions products.

And we expect that level of margin to continue, or higher, for the balance of the year in the USCIS.

International exceeded our expectations for the quarter, growing 7% in local currency as Europe, Latin America, and Canada all delivered positive growth for the quarter.

In International, our Personal Solutions, our Marketing Services product lines contributed healthy double-digit growth in the quarter.

Also our significant investments we've been making in technology and analytical services is paying off in a big way as we realize double-digit growth from our Analytical and Decisioning Services in Canada, Europe, and Latin America.

On to TALX.

TALX exceeded our expectations again, delivering solid double-digit growth as The Work Number, rapid reporting, and talent assessment offset the anticipated softness in Tax Management Services.

Great quarter again for TALX.

North American Personal Solutions delivered stronger revenue growth than we expected along with improved operating margins.

A 12% growth in subscription-based revenue was a result of improved average revenue per subscriber due to pricing and mix optimization efforts.

While acquiring new subscribers is challenging in the current environment, we expect to sustain the level -- the current level of revenue per subscriber.

We've also made a number of very good process improvements of our operational efficiencies, customer experience and the rates for conversion and churn.

Finally, North American Commercial again exceeded our expectations with double-digit revenue growth and improved operating margins.

US Commercial Risk and Data Management delivered strong double-digit growth during the quarter.

As you know, we completed a very important divestiture during the quarter as we continue to tightly align our business units to our corporate strategy.

Direct Marketing Services, we call it DMS, was not a good fit for our long-term business strategy.

We were able to sell the business to Alliance Data Systems at an attractive price and, most importantly, create a strong, long-term strategic partnership with ADS.

As we've done in the past, we'll continue to assess each of our business units in an effort to validate their role for future business success and their ability to deliver the business performance that we and our shareholders expect.

However, at this point we have no further divestiture plans underway.

On to TAS, our Technology and Analytical Services offerings continue to deliver value to our customers, strengthen our partnerships, leverage our data assets, and develop long-term sources of future revenue growth.

Our InnoTech platform delivered strong double-digit revenue growth.

During the quarter revenues were up 31% excluding pull-through revenue from data that is included in the transaction.

In the US, an increasing percentage of our revenue is driven by -- is now driven by our various decisioning platforms.

Our analytical solutions continue to penetrate the market.

Equifax risk scores delivered with an online credit report increased now to 32% in the second quarter, which is up nicely from both the first quarter of 2010 and the second quarter of 2009.

We've invested heavily in developing analytical products during the past few years and as a result the analytical insights that our products provide have become increasingly valuable tools to improve our customers underwriting process.

For example, since 2008 we have witnessed a steady increase in the number of scores delivered with each of our online transactions and we expect that trend to continue into the economic recovery.

We've talked a lot about NPI.

Our new product initiatives delivered another quarter of very strong double-digit growth.

Year-to-date we are ahead of our expectations and we expect that trend to improve as the year progresses.

There's a clear indication from our customers that the new products which leverage unique data from The Work Number and IXI are disrupting the status quo in the marketplace.

Our ongoing activities with lean and other process improvement initiatives are also improving the fundamentals of our business operations by driving out unnecessary expense and positioning us with strong operating leverage.

For the first two quarters of this year we've exceeded our cost reduction targets for global operations.

Lean initiatives throughout the rest of the Company have also exceeded targets we set at the beginning of the year.

Lean is truly starting to become a part of our DNA and how we operate this company.

Over the past few years, our focus has been twofold -- continuing to execute on our strategy to drive revenue growth while exercising strong expense management discipline to protect our operating margins.

I'm proud of the team's accomplishments during this period.

We have significantly improved our product mix, acquired diverse and important data assets which will enhance our competitive position, strengthened relationships with our customers, and improved our focus by divesting non-strategic business segments.

As the environment improves, many of the headwinds we have endured will abate and we would anticipate a solid lift to both revenue growth and operating margins.

We're executing on a winning strategy that will deliver increasing value to our shareholders.

Now a quick look forward before Lee gets into some of the financial details for the third quarter.

For the third quarter USCIS revenue is expected to be up in the mid to high single digit range when compared to the third quarter of 2009.

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

It should be noted that the third quarter 2009 was the strongest quarter for International.

So we've got tougher comparables in the third quarter.

In the third quarter, TALX revenue is expected to deliver once again strong growth in the mid teens.

We expect strength in The Work Number, talent assessment driven by further market penetration and new products will offset continued softness in Tax Management Services caused by the trends in unemployment.

Personal Solutions should grow in the mid single digit range for the quarter and North America Commercial Solutions is expected to deliver low double digit growth in the third quarter when compared to the third quarter of 2009.

So once again, I think a solid second quarter and great momentum going into the third quarter for the Company.

Lee, if you'd give the details on the financials, that would be great.

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 and Direct Marketing Services as discontinued operations given the recently completed sale of these businesses.

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

Our second-quarter performance benefited greatly from the continuing progress on our key strategic initiatives along with improving business conditions for revenue growth.

Now for the details, compared to the same quarter in 2009, consolidated revenue from continuing operations of $460.7 million was up 7% year-over-year.

Changes in foreign exchange rates favorably impacted revenue by approximately $6 million.

In constant dollars, revenue was up 6%.

The acquisition of IXI and Rapid Reporting added approximately 4 percentage points of growth in the second quarter.

On a GAAP basis, the operating margin in the second quarter was 23% compared to 23.8% in the second quarter of 2009.

Excluding the amortization of acquisition intangibles, adjusted operating margin for the second quarter was 27.8% compared to 28.4% for the same period in 2009.

Diluted earnings per share from continuing operations attributable to Equifax for the quarter was $0.45.

Excluding the impact of acquisition-related intangible amortization and the gain from the sale of APPRO adjusted earnings per share was $0.58.

Discontinued operations contributed approximately $0.015 to this result.

With these operations fully divested as of July 1, there will be no similar contribution in the third quarter.

We reduced debt by $81 million during the quarter and $107 million year to date.

During the quarter we also repurchased 1.7 million shares of stock for $55 million.

At quarter end, our remaining Board authorization for share repurchase was $207 million.

Moving to the individual business units, US Consumer Information Solutions revenue was $184.6 million, flat when compared to the same quarter in 2009 and in line with the expectations we communicated during our first-quarter earnings release.

Online Consumer Information Solutions revenue, which excludes discontinued operations, was $120.3 million, down 6.7% compared to 2009, primarily driven by an 8% decline in our online credit decision volume.

Average revenue per transaction was down 1%, primary driven by sector mix shift.

Mortgage Solutions revenue of $28.8 million was up 1% when compared to the second quarter a year ago.

Although the mortgage bankers application index for the quarter was down 29%, both core mortgage reporting and settlement services continue to benefit from share gains.

Consumer Financial Marketing Services revenue was $35.5 million, up 30%.

In addition to the contributions of IXI, which performed as expected, Credit Marketing Services has stabilized after several quarters of decline and revenue from our prescreening services grew 6%, the first growth quarter for this product since the first quarter of 2007.

The operating margin for our US Consumer Information Solutions segment was 37.1%, up a full 2.5 percentage points from 34.6% in the first quarter and down slightly from 37.4% in the second quarter of 2009.

These margins are all now stated on a continuing operations basis.

Compared to the first quarter, operating margins were maintained in online Consumer Information Solutions while the operating margins in both Mortgage Solutions and Consumer Financial Services improved significantly.

Our international business unit's revenue was $118.2 million, up 12% from $105 million in 2009.

In local currency, revenue was up 7% from a year ago, ahead of the expectations we communicated during our first-quarter earnings call as all three geographies delivered positive local currency growth.

By region, Latin America's revenue was $56.7 million, up 21% in US dollar terms and 12% in local currency when compared to the same period in 2009.

Europe delivered revenue of $32.5 million, down 1% in US dollars but up 4% in local currency when compared to the same period in 2009.

Both the UK and Spain delivered positive local currency growth despite the challenging economic circumstances in both countries.

Canada Consumer Information revenue was $29 million, up 15% in US dollars and 1% local currency when compared to the same period in 2009, reflective of a low growth economy with limited consumer credit activity at the current time.

International's operating margin was 25.4%, up from 25.3% in 2009.

Our TALX revenue was $99 million for the quarter, up 15% from the second quarter of 2009 and ahead of expectations we had previously communicated.

The Work Number delivered another quarter of strong broad-based growth with revenue of $50 million, up 28% as the addition of Rapid Reporting, which performed as expected, and double-digit revenue growth from Work Number collections, pre-employment, and government markets offset softness in mortgage and consumer finance markets.

Tax and Talent Management Services delivered $49 million in revenue, up 4% compared to last year, driven significantly by strong performance in our talent assessment business, which more than offset the year-over-year decline in Tax Management Services from lower unemployment claims activity.

The TALX operating margin was 23.2%, flat with 2009.

North America Personal Solutions revenue was $40.3 million, up 8% from prior year and significantly better than the outlook we gave during our first-quarter earnings call.

Direct to consumers subscription revenue was up 12% year over year, driven largely by the increase in average revenue per subscriber.

Operating margin was 25.4% for the quarter, up from 21.5% in the second quarter of 2009 as operating expenses declined 3%.

North America Commercial Solutions revenue was $18.6 million, up 18% on a reported basis and 13% in local currency, driven by strong double-digit growth in our US operations.

Revenue was also ahead of the expectations we communicated during our first-quarter earnings call.

The operating margin in our commercial business was 20.2% compared to 15.4% for the second quarter of 2009.

With a broad-based performance this quarter we are well-positioned to deliver successive improvement in year-over-year revenue growth for the remainder of the year.

Now let me turn it back to Rick.

Great.

Thanks, Lee.

Just quickly before we get to the Q&A, as I said just a few minutes ago, there are many uncertainties at the macro level.

At the micro level, things we can control day in and day out -- I feel better now than I have felt in three or four years.

We've got a great set of initiatives, we've got innovation taking hold across the Company.

Lean is taking hold across the Company.

We have taken the tough calls in the last few years to get our [prospectus] in line which will give us significant lift in incremental margin when this market does turn.

As I look forward to the third and fourth quarter, again I am convinced we'll have continued improvement in our operating performance for the balance of the year.

For the third quarter, specifically assuming the current exchange rates, we expect revenues to be up in the mid to upper single digit range from a year ago quarter.

Adjusted EPS is expected to be between $0.55 and $0.59 a share.

When considering the dilutive impact of our recent divestiture, which was approximately $0.02 a share, the guidance in the third quarter is consistent with our outlook for improving performance in the second half of 2010.

So with that, operator, we'd like to open up to any questions our audience might have.

(Operator Instructions).

Carter Malloy, Stephen.

Congratulations on the quarter.

I thought it was great.

On the DMS revenues and APPRO, can you break those out what they actually were in 2Q?

Because all the consensus numbers actually included that, so we're just trying to get an apples to apples.

Sure, hold on one second.

Lee, do you have that?

Yes, second quarter -- about $18 million in Q2.

Okay, great.

And then on TALX, can you just talk about how or why -- what's driving The Work Number growth in the face of such serious mortgage volume headwinds and why you guys expect those to stay elevated in the face of continued declines?

Carter, it's truly broad-based.

There's a lot of new products that we're launching.

Our collections business is starting to really gain great, great attraction, which is great.

We continue to add more names of records to the file, which obviously gives you lift.

The government business is strong.

Pre-employment is starting to pick back up, so it's broad-based.

There's no one piece that's driving it.

It's just the continued growth.

It's kind of an amazing story now.

For the three years we've owned it, this thing has grown strongly each and every quarter for three years, so I expect that to continue, Carter.

Carter, I would --

We're also introducing The Work Number to more and more customers leveraging USCIS as well as [my counts].

Carter, I would note our active records are up 4% year-over-year and our total records are up 5%.

So even with flat market demand, as we have more records we capture more revenue.

Second, in addition to what we've done in the pure verification part of the business, our complementary services, which dovetail with the recordkeeping services we're performing with verification, are up nicely year-over-year.

Those are things like I-9 services, W-2 services, electronic time keeping.

So there are several things around that whole bundle of services that continue to go well even in a soft economy.

Okay, great.

And lastly, you guys alluded to in ADS partnership.

Can you give us a little more color on what that is?

Yes, we've always done some things with ADS and working with their Chairman, we have decided there are more things we should be doing together.

And negotiating a transaction of say like DMS enabled their chairman and I to get closer and I think there are broader, better days ahead in our relationship with ADS.

I'll leave it at that right now, Carter, but I expect us to get a lot closer strategically with them in the coming months.

Okay, fair enough.

I'm going to hop back in the queue.

Thanks.

Andrew Jeffrey, SunTrust.

Thanks, good morning.

A couple questions just sort of bigger picture, Rick.

It sounds like we're finally seeing the kind of cyclical churn we've been waiting for.

You mentioned prescreen volume up 6% in the quarter.

Is that -- should we think about that as a lagged effect to the increase in mailings we saw at the end of last year and the beginning of 2010 which didn't translate into maybe what some would have thought would have been better prescreen volume in the first quarter and now we're just seeing kind of the catch up on that?

That's one way to look at it.

So I guess it's the first quarter we've seen prescreen up in what's that two years, two and a half years?

Three years, and we're seeing that trend, by the way, continue.

We expect it to continue to grow in the third quarter.

Whether it's a lag effect of the mailings that we saw late last year, possibly.

More importantly for our business model is, as you know, once prescreen picks up, the lag effect for us is about 45 days, you then start to see the uptick in online, which again we started to see toward the end of the first quarter.

Okay, so that's nice visibility.

It seems like you're getting the portfolio of technologies well aligned with your competitive priorities in the market, which is great to see, and continuing to buy back stock.

When you sort of survey the product front, could you just walk through a few of your top priorities and specifically touch on technology or functionality you think you need to enhance your competitive position, one?

And then two, the cross-sell potential between TALX and the core business, which would dovetail nicely with the kind of acceleration you're seeing in the TALX segment?

The priorities right now from a technology perspective specific to -- not the infrastructure itself, but monetization of technology, I'd say comes in two primary buckets.

One we've been at now for a couple of quarters is taking the core decisioning engines we have that have been so successful here, taking to other parts of the world and that is starting to pay significant dividends, be it our fraud platform we've taken to the UK and bring it to Canada or our InnoTech platform we bring from here in Canada here in the UK and into Iberia, also now down into LatAm where we've invested heavily in new decisioning across Latin America.

So decisioning engines and accelerating that penetration outside the US because we've got great penetration within the US, the vast majority of all the big banks we have decisioning already installed.

So it's replicating that model outside of the US.

The secondary technology we're investing heavily in is what we call database linking.

We have a term and it's [certainly] called Keystone which is basically an ability for us to infiltrate all these very disparate databases we have real-time with very great cost efficiency to pull data together and build products faster and less expensively than we have in the past.

We've been at that now for about 12 months or so and that should come to a conclusion sometime later on this year.

So those are the two big things we're investing in from a technology perspective.

On the cross-sell, we are hitting it out of the park, leveraging USCIS and The Work Number.

And in the center of that, by the way, is a product management team building new products to disrupt the marketplace.

And by the way, it goes beyond just The Work Number and USCIS.

It's now embedding that plus IXI.

So if you think about it, credit data, income data, employment data, wealth data -- leveraging that is making a big difference in the marketplace.

It's going to really be beneficial to have Dan Adams, who is steeped in his understanding of the credit side, now running TALX and getting his hands on The Work Number data and leveraging the skills and knowledge of the USCIS with now [Woody Floater] leading that.

So great progress to date and I think even better days ahead.

Okay, and I assume that as we get into 2011, maybe you can start to quantify the contribution from some of those initiatives.

It's already -- it has outpaced any number we could possibly have thought of.

Okay, thanks a lot.

Michael Meltz, JPMorgan.

Good morning, this is David Lewis for Michael.

I was just wondering if you guys could touch on what you're hearing from the banks, if you'd just provide little more detail there about customer acquisition plans now that FinReg is done.

Cautious, I'd say cautious at this juncture.

That's from big banks to small banks.

You may have, Dave, an outlier here or there who is a little more aggressive, but by and large what you see and read in the paper is what we feel and hear as well as we talk to the CEOs and head marketing guys at the different banks, cautious.

Want to get back in the market, know they've got to grow smartly.

And Dave, what we focus on is when you grow, growing smartly is so important and we think Equifax is still uniquely positioned to help them grow, because not only the credit data, but the income data, the employment data, and the wealth data.

So we spend a lot of time with the banks helping them target market the right people with our data assets.

That's great.

Thanks, Rick.

And then just one more for me.

The 360 degree winds that you had last quarter, can you just give us an update there on what the pipeline looks like?

Strong, and we will continue to win clients every day.

It's across all sectors, small banks, mid banks, big banks, insurance companies.

The 360 view is resonating extremely well for customers.

Thank you.

You're welcome.

Hence that's why you're seeing a pickup in USCIS and you're seeing strong growth in TALX as well.

Shlomo Rosenbaum, Stifel Nicolaus.

It looks like you guys got a lot of good, positive momentum, so keep it up.

I want to ask you a little bit about what you commented, Rick, on the disruption from IXI and TALX.

Could you give us some examples and maybe quantify where you're starting to see that change the marketplace and your position within the marketplace?

Absolutely.

The level of conversation, Shlomo, we can now have with banks is far different than we could ever have had in the past and far different than anyone else could have right now.

When you can combine to look at a client making underwriting decisions, and it's not just based upon your credit, your past credit behavior.

But are you employed?

How long were you employed?

How much income do you have?

How volatile is that income?

How much wealth do you have?

All of those come into play on your ability to pay off an obligation.

So our customers now have a much better way to make an underwriting decision than they ever have in the past.

The result of that is all the ones we've been talking about, now for the past X number of quarters, is why TALX is growing at the rate they're growing.

It's one of the reasons we're seeing significant turnaround in USCIS.

It's a core of all the new products -- we've talked now for years about our NPI.

At the core of that NPI and oftentimes it's things we're doing with IXI and things we're doing with The Work Number in combination with the core credit.

And there's more to be done, by the way.

Starting to think about our income data that we have at the zip plus four level, by the way.

So you can target market either digitally or otherwise much smarter than you could before.

So if you can couple together wealth data, the zip plus four and income data the zip plus four and then credit data the zip plus four, those are things no one else could do in the past.

So it's helping on the underwriting side and on the marketing side.

Are you seeing that result in you guys taking market share?

How do you (multiple speakers) look at this?

Yes, yes, yes.

And how are you measuring it?

Accounts I didn't do business with yesterday or accounts I did do business with yesterday, but at a lesser amount now I'm doing more share.

So it's either new customers, and I mentioned I think last quarter, an insurance company we've never done business with, we're now their primary provider as a result of this.

Or there may be other cases where I'm doing business with a bank and I've got X dollars of revenue, or X share of revenue, now it's gone up by some factor.

So we track it very seriously, we measured it every month.

Are you displacing any competitors as a result of this?

Yes.

Just a couple more questions.

Can you just go into detail on -- mortgage was very strong.

Is the ESS business growing and outpacing what we've seen beforehand?

Just trying to nail down what's driving them as it was particularly a really, really good quarter.

You're saying on the margin or the top line?

Top line (multiple speakers) USCIS.

Yes.

The trend is a continuing trend, as we've said in the past, that we have outperformed the index now for -- I can't remember, Jeff -- a number of quarters, and that trend is continuing.

So its core mortgage, tri merge, it's the reseller channel, it's ESS, it's a combination of a whole suite of products we have to offer.

Let me touch on one other thing which I think is important as well, which is not the heard of your question, but Lee mentioned it.

We have overwhelmed our mortgage business with lean and have taken a lot of cost out, improved processes, so you saw a nice improvement in margin in the second quarter as a result of not just topline growth, but a much more efficient operation.

We expect that to continue going forward as well.

And then final one for me.

Have your internal expectations gone up a lot for the year based on the core to date you guys have and the momentum that you guys have got?

Yes, I expect, as I said early on, as Lee said, that the kind of guidance we gave you earlier in the year is that second half will be stronger than it was in the first half.

second quarter exceeded our expectations.

I'm more bullish now on the outlook for the second half of the year than I was at the first half of the year.

Okay, great.

Thank you very much.

Bill Warmington, Raymond James.

Good morning and congratulations on the improvement in organic revenue growth.

I just wanted to -- that looked like -- the organic revenue growth looked like it had improved to about plus 2% from minus 1% last quarter.

I just wanted to confirm those numbers and then also ask that for your guidance in the third quarter of mid to upper single digit revenue growth, how much of that do you think you're expecting to be organic.

The answer to your first question is correct.

Okay, good.

Always good to check.

Yes.

And the contribution from acquisitions is tracking pretty consistently, but I think we said it was about 4% in the first quarter, probably consistent second quarter, which means the organic growth over prior year is up.

Okay.

And the corporate expenses of $29.5 million, those were a little bit higher than what you guys had guided to in terms of $25 million to $28 million.

Could you talk a little bit about what was behind that and then also how we should think about that going forward?

Sure, I'll let Lee after I give you one caveat.

Even though it was up, obviously we did perform at EPS levels.

Lee?

The increase over prior quarter was a little stronger than we had planned going in, really driven by some investment decisions we make as the quarter unfolds with a little bit stronger revenue environment.

We're investing a little bit more on some [IT] infrastructure and support and Rick talked about some of the underlying investments we're making that will have strong long-term paybacks, as well as a bit more investment in some market-oriented growth initiatives that in the incubation period we support from our corporate expense.

I would expect given the bit stronger environment we're seeing, that the range for corporate expense for the second half of the year is probably $27 million to $30 million per quarter, which is a little bit higher than our prior direction.

Got you.

The other question I had for you was Personal Solutions growth -- nice acceleration from around 3.5 to 7.5 in the quarter despite what's a pretty tough environment out there for consumer spending.

So could you guys talk a little bit about what actions you've been taking to drive better revenue growth there and also talk a little bit about trends you're seeing and subscriber additions, churn and revenue per unit?

Sure, Bill, let me just hit the high level.

I may have mentioned this in the past.

Sometime late last year I thought it was time for a quick timeout.

It's always I think important to take a look at your business process, customer experience and see how you can improve things.

We brought an outside consultant in, did some really deep dives, kind of ripped apart the model, looked for flaws that we could -- and weak points in the process we could improve, really focusing on unique visitors, total visitors, churn and conversion, customer experience, pricing and mix.

And we are now well into the implementation and we started implementing that in early first quarter.

You're seeing the benefits of that.

You're seeing ARPU move up.

You're seeing churn improve.

Churn was significantly down over 2000 -- second quarter 2009.

So it's really a combination of all those.

The new leadership team there, kind of energized team, they're doing the right thing.

So I feel very good about not only the second-quarter performance but the outlook (inaudible) both of the top line and our margin.

Just a great job on margin performance, as you saw as well, in the second quarter.

Are you guys seeing a high level of reactivations -- previous customers coming back to the product?

I don't know, Bill.

I don't have that data at my fingertips.

I'd be misstating if I gave you an answer.

All right.

Well, listen, congratulations on a strong quarter.

Thank you.

George Mihalos, Bank of America.

I just had a couple of quick questions.

I wanted to delve into the USCIS a little bit more.

You mentioned the prescreen volume coming back strong, nice performance out of the CFM.

Would you care to give us a sense of what you would expect sequential growth to look like on the OCIS side now as some of those prescreens start to spillover into the database?

You're referring to third quarter versus second quarter?

Yes, third versus second.

Very much in line with -- I gave you the overarching look for USCIS.

You're talking about USCIS being up a bit -- upper single digits.

I'd expect OSCIS (inaudible) -- is your question specifically to OCIS?

Yes, specifically OCIS.

I would expect sequential improvement, maybe I said that right.

Yes, sequential improvement third quarter versus second quarter.

Okay, and if we can -- taking a look again at the TALX business, the tax management -- talent management, as you said, performed well.

Was that predominantly a market share move or is it just sort of broader economy improvement?

Good question, George.

If you think about that business, and we combine them, but the dynamics are largely different in talent versus tax.

The tax business, there are many great components of it, but a big catalyst, if you will, for growth is the trends in unemployment and when unemployment is at a lower level that business hums.

You saw it was obviously strong growth in 2007, 2008, 2009, slower growth in 2010.

So that business in a high unemployment environment that we're now, you'd expect it to be softening.

What you're seeing is significant growth in the talent assessment business as some of our large customers start to, rehire.

And number two is they branch out and diversify their business model away from just government agencies to the public sector.

So that's really the growth engine there is the talent assessment business.

Okay, great.

Thanks, guys, and congrats on the quarter again.

Operator, we have time for one more question.

Carter Malloy, Stephen.

Looking at the North American commercial, we haven't touched on that much.

Was that more growth on the marketing side or the risk side of that business?

US risk and marketing book look strong.

And were those larger customers, smaller customers, competitive wins, or growth within existing customers?

Competitive wins and growth within existing customers.

Business is starting to hum.

Okay, that's good.

And then on USCIS, what percent of that business is analytics-driven?

Analytics -- we don't break that out.

I think in the past you've given us an idea of interconnect or (multiple speakers).

Well, I gave you some numbers in the opening comments, which I have since forgotten.

We gave you the growth rate of the decisioning engines.

It's significant growth, strong double -- I think it was 30% growth, 31% growth in effect, excluding -- it's important when you look at that quarter you exclude the data pull-through.

The data pull-through, whether you're looking at income models or you're looking at interconnect or decisioning engines, can just be very, very misleading to you if you include data pull-through.

Excluding data pull-through it was up 31% [linked]-quarter.

Okay, great.

And lastly very quickly -- on prescreen, you said I think it's going to accelerate in 3Q.

I know some of that's due to lag, but do you guys -- are you seeing thus far in the quarter the card marketers continue to accelerate their activity in the market?

Yes, yes.

Okay, great.

Thank you.

Okay, I'd like to thank everybody for joining us on the call.

And we'll be available if you have any additional questions.

Thanks.

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