易速傳真 (EFX) 2013 Q4 法說會逐字稿

Welcome to the Q4 2013 Equifax 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.

Thanks.

Good morning.

Welcome to today's conference call.

I'm Jeff Dodge, Investor Relations.

With me today are Rick Smith, 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 2012 Form 10-K and subsequent filings.

In order to better understand our operating performance, it's important to remember that there were some unusual or infrequent items in the fourth quarter of 2012: the CSC acquisition fees, a pension settlement, and certain unique income tax items, all of which were detailed in our fourth quarter release in February of 2012.

In addition, there were some unusual arrangements of frequent items in the fourth quarter of 2013: the collection of certain reserve 2012 billings; a restructuring charge to realign our internal resources against our most important strategic opportunities; and an impairment of our investment in Boa Vista Servicos driven by reduced near-term market expectations for credit information services in Brazil; and an increased investment needed to fully integrate and capitalize on the longer-term opportunity.

We will be referring to certain non-GAAP financial measures including adjusted EPS attributable to Equifax, adjusted operating revenue and adjusted operating margin, that will be adjusted for certain items which affect the comparability of the underlying operational performance.

Adjusted operating revenue excludes the collection of certain reserve 2012 billings.

Adjusted EPS attributable to Equifax excludes acquisition-related amortization expense and the associated tax effects, as well as certain other items.

For 2012, the excluded items are the aforementioned CSC acquisition fees, the pension settlement and certain special income tax items.

Then for 2013, excluded items are: the collection of certain reserve 2012 billings, which occurred during the fourth quarter of 2013; the resource realignment charge; and the impairment of our investment in Boa Vista.

Adjusted operating margin excludes certain items.

The items excluded for 2012 are the CSC acquisition fees and the pension settlement which was a non-cash charge.

For 2013, adjusted operating margin excludes the collection of certain reserve 2012 billings and resource realignment charge.

These measures are detailed in our non-GAAP reconciliation tables included with our earnings release and also posted on our website.

Also, please refer to our various investor presentations, which are posted in the Investor Relations section under the About Equifax tab on our website for further details.

Now, I like to turn it over to Rick.

Thanks, Jeff.

Thanks to each and every one of you.

The flexibility in working with us, with the call today.

We have experienced, as I think you've seen, a pretty severe storm down here.

I know those of you on the East Coast are experiencing this storm today, so I know it's difficult for you, as well.

So you're in our thoughts as you get through this storm for the next few days.

Jeff's preamble there was obviously longer than normal.

It's due to the fact that we've had a number of moving parts in the quarter.

It started out to give you as much transparency as possible, hence, Jeff's comments.

Also, what I am going to do here is, before I get into the details of the quarter and the business unit performance, I want to reflect back on the last conversation we had together, which was for the third quarter 2013 call.

We talked about the outlook for fourth quarter 2013.

We gave you some insight into our expectations for calendar year 2014.

If you wind back to our last call, we talked about fourth quarter revenue would come in between 6% and 8%.

We delivered at 7% reported and 8.4% constant dollar growth.

We also said that organic non-mortgage market growth would come in at the upper end of our 6% to 8% targeted range, and we delivered 8.1%.

2013 very much came in line as we expected.

As we sat back on the last call, we talked about 2014.

We said mortgage would face strong headwinds in the first half of the year, lessening headwinds in the back half of the year.

That seems to be holding up pretty much as we expected.

Lee will give you a lot of texture and color around the mortgage market expectation for the year.

The growth, we said, expect us in 2014 to deliver organic -- core organic non-mortgage growth in a range of 6% to 8%.

We were clearly anticipating being in that range for the year.

During the call, Lee and I will give you greater transparency to the FX impact, which, as I think you've all seen, has had pretty significant volatility starting back in December, and continuing into January.

So, Lee will help you understand how the FX impact will impact both our revenue growth for the year and our EPS growth.

Again, he'll give you more insight into the mortgage market outlook for the year.

So in summary and before I get into the details here, 2013 was a great year.

It ended as we expected.

As we sit here now in February 2014, with the exception of FX, it looks very much like the picture we painted for you back during the third quarter call.

I hope that helps a bit.

Obviously, we will have ample time for Q&A once we go through the details.

I'll now jump into my traditional comments regarding the fourth quarter.

Our fourth quarter performance reflects continued strong execution on our strategic growth initiatives, as four of our five business units met or exceeded the guidance we gave you during the third quarter call.

For the quarter, adjusted total revenue was $571 million, up 7% from the fourth quarter of 2012.

Importantly, our core non-mortgage market growth -- organic growth was 8% for the quarter enabling us to more than offset the mortgage headwinds that increased as expected from the third quarter.

The adjusted operating margin was 27.4%, up significantly from 25.5% in 2012.

Adjusted EPS was $0.91 a share, up 21% from $0.76 a year ago.

Year-to-date, adjusted total revenue was $2.3 billion, up 11%.

Adjusted EPS was $3.60, up 24%.

A very solid year, indeed.

Lee will shortly give the detailed financials for the quarter.

Before that, as I normally do, I will cover some key business highlights for the year and how we see ourselves positioned for 2014.

Looking back, starting with USCIS, with mortgage headwinds and the integration of its largest acquisition ever, USCIS took on some very big challenges last year and delivered an impressive performance.

As we expected, their core non-mortgage market organic revenue growth accelerated from the third quarter, ending the year at the upper end of their long-term growth target of 5% to 7%.

The verticalizing of the sales organization on USCIS has developed a much deeper understanding of our customers' challenges and new opportunities for growth.

Combined with our enterprise sales strategy, we are developing more enduring customer relationships, integrating and cross selling products from all of our business units.

In 2013, we expanded our key client programs from four clients to eight major clients, including four large banks, two telecoms and two large finance companies.

The success of our KCP program is broadening relationships with our largest customers and has elevated our interaction in these institutions at the very Senior Executive levels.

In addition to our more traditional products, we are helping them with leveraging more sophisticated data and analytics to enhance underlying decisions, mitigating fraud and improving identity management routines, linking our data with their internal data, regulatory compliance and improving collections effectiveness.

As the economy stabilizes and we return our focus to growth, and we will do so, we expect even more opportunities to emerge that will further leverage our unique data assets in analytics and technology capabilities.

One of USCIS' most significant accomplishments in 2013 was a seamless integration of the CSC credit services asset we acquired in December of 2012.

By the end of the year, they achieved all their financial and business objectives.

In addition, all of the former CSC credit service customer accounts have been assigned to the appropriate sales channel to ensure the best service levels for those customers going forward.

We talked about that acquisition being a low risk acquisition, but one we took very seriously.

The team just did a heck-of-a-job on delivering on the integration and financial package last year.

In 2014, we expect USCIS reported revenue growth to be at a zero to 2% range as we cycle through the mortgage headwinds, particularly in the first half of the year.

Their core non-mortgage market organic growth in 2014 is expected to be in the 5% to 7% range consistent with their long-term growth target we communicated to you of 5% to 7%.

International, they again had another strong performance in 2013, delivering 11% constant dollar growth, which is at the upper end of our multi-year target range.

Throughout the year, they strengthened their market position by continuing to invest in new product innovation and strategic acquisitions.

In 2013, 14% of their revenue came from new products launched in the prior full year.

We call that our Vitality Index.

Some highlights for International, the mobile phone penetration across the globe peaking, telecom customers face challenges in delivering faster organic revenue growth.

Leveraged on our vertical expertise in the US, we're working with customers to leverage data and analytics to develop higher value propensity models, which can deliver as much as a [30%] improvement to their decisioning process with postpaid account origination processes.

In Latin America, approximately 65% of all adults are un-banked.

Here, we're leveraging our experience with differentiated data assets to develop tools that will improve financial institutions underlying decisions for individuals who have no credit history.

Most recently, we closed two very important strategic acquisitions for International, Inffinix in Mexico and the TDX Group, which is headquartered in the UK.

These acquisitions will broaden our decisioning in work flow management solutions offerings in collections and enable us to further penetrate existing, as well as new customer relationships in our assorted markets.

Inffinix, a small company, provides collections, work flow software on a licensed basis to companies throughout the Latin American region.

The software enables customers, collection staff to efficiently process, manage and track accounts throughout the entire collections process.

Today, Inffinix's geographic footprint includes customers in Mexico, Brazil, Chile, Peru, Colombia and Costa Rica.

Our plan is to take this pod, which is very well suited for Central and South America across our entire Latin American footprint in the coming years, providing for additional growth opportunities.

TDX provides data and analytics-based debt management solutions.

Essentially, they are the middleman between the institutions and the collection agencies, returning the optimal placement of accounts to maximize collections on the institutions' delinquent portfolio.

With their unique data and analytics, TDX provides critical high-value solutions to customers largely in the UK, Spain and Australia.

Again, we plan on not only growing TDX in that footprint but taking it to countries like Canada and the United States down the road for, again, additional growth opportunities.

Historically both these companies have experienced double-digit revenue growth and carry EBITDA margins which are comparable to our Company average.

Think about it this way as well, we play in the collections arena today.

These give us two great opportunities, TDX like a SaaS model, and we said, Inffinix as a licensed model, that allow us to service our existing customers and new customers in ways we never could do before.

It puts us on a more level playing field with others in the marketplace, also.

Over the course of 2014, both these companies will be fully integrated into international's technology and analytical services business.

We also made an acquisition of the Number One credit bureau in Paraguay, giving us a leading competitive position in another important geography across Latin America.

As you may know, we're already in Paraguay.

This will gives us the ability to combine the one into two.

The UK and Spain had an outstanding year in the face difficult economic conditions, delivering strong growth and gaining market share by focusing on new products, assessing new data sources and developing new products.

For 2014, we expect international's constant dollar -- constant currency revenue growth including TDX and Inffinix acquisitions, to be between 30% and 35% growth over 2014.

Lee will give you more texture around that and the impact on EPS later.

WorkForce Solutions delivered one of the most outstanding performances in 2013.

We revamped many of the go-to-market strategies and ambitiously entered new markets for them to leverage their enterprise selling initiatives with USCIS, energized the organization with talent, development and outside hires.

They also significantly accelerated the core non-mortgage market with the envelope from the third quarter to a very impressive 14% growth in the fourth quarter.

As a result, all of our key non-mortgage verticals in verification services delivered double-digit growth driven by market penetration and new products.

Our recently announced Decision 360 solution for the auto industry is a powerful example of how WorkForce Solutions is finding new opportunities for revenue growth by leveraging our data assets and verification resources.

Through a single ordering interface, a dealer can get verification of employment, verification of income, verification of address, verification of rent and verification of auto insurance while the consumer is in the dealership, a really big win for the auto dealers.

These are all delivered via the internet with a single sign-on, combined with our credit reports and scores, this represents one of the newest Decision 360 product offerings and a true disruptor in the marketplace.

The historical records in The Work Number are also providing a new opportunity to drive revenue growth.

We now have 56 million active employed individuals in our database and over 245 million total records.

We now have over 3,100 companies contributing payroll information into our Work Number database.

We're very much on target to reach our goal of over 70 million active records in the next few years.

For new product innovation, EWS has implemented triggering service that enable state governments to apply greater fiscal discipline in their administration of various social programs.

They can validate and verify someone's local income, or are they employed or not employed before they provide a social service.

Finding new applications for our unique data, demonstrates to our customers the commitment we have to innovation and to delivering high-value solutions that improve their underwriting decisions.

The employer services portion of WorkForce Solutions also had an outstanding year in 2013.

One of the biggest initiatives was the implementation of SIDES, which is the State Information Data Exchange System along with CaseBuilder to significantly streamline the unemployment claims management process.

Clearly, 31 states on SIDES platform, it standardizes, streamlines and automates their entire unemployment claims process.

These two technology platforms are expected to contribute to improved operating performance as well as customer service, market penetration and retention.

To be honest, that part of EWS was under invested, Dann and the team have stepped-up the investment.

We had gone from a business that was probably lagging to a business that's clearly leading in unemployment claims, which bodes well short-term and long in the marketplace.

EWS was also granted a number of LEAN initiatives to further streamline their work process, improving the quality of service to our customers.

Increasing our penetration of customers with employee services solutions, strengthens these relationships and increases the contributions of data for the Work Number database.

Finally, one of the more significant new product launches in 2013 was our Affordable Care Act management platform.

Leveraging the analytical expertise we acquire through our eThority acquisition in 2011, this product is helping employers understand the financial impact of and manage their ongoing compliance with the Affordable Care Act, truly leading edge in the marketplace.

As importantly, this product has resulted in official contributions to the data into another database as we signed new customers seeking to understand and ensure they are compliant.

Said another way, the only way we can help those clients make sure they are compliant is if they give us their Work Number database, which they are not now doing.

So, we added to the records database and we do route them through the analytics to ensure they are compliant with the Affordable Care Act.

We began demonstration of this product in December of 2012 with the platform operational by May of 2013.

In October of 2013, this product was awarded the HR Tech Top Product of the year, a great example of our focus and commitment to solving our customers' most critical decisioning needs and our ability to rapidly deploy these critical solutions.

For 2014, we expect WorkForce Solutions revenue growth to be approximately flat to up slightly when compared to 2014, reflecting the strong mortgage headwind we have been expecting, particularly for the first half of the year.

The core non-mortgage market organic growth in 2014 is expected to be an impressive 8% to 11% growth when compared to the long-term growth target of 7% to 9%.

On the personal solutions.

Personal Solutions delivered double-digit growth for the year exceeding their long-term growth target and expanding operating margins by over 100 basis points.

Through an intense focus on customer attention and lifetime value, we have consistently increased average revenue per subscriber and return on marketing spend.

PSol has developed some best in class management disciplines which were now implementing not only in the US, but in Canada, UK.

We're taking it in to Latin America, as well.

The acquisition of TrustedID was PSol's first acquisition.

It significantly broadens our product line and identity protection market and gives us a technology platform that we can leverage in the delivery of indirect solutions to many of our B2B customers.

While North America commercial solutions experienced a market slowdown and project slowdown in the fourth quarter, they delivered solid results in 2013, gaining share in what turned out to be anemic market growth for small businesses.

They grew the business at 7% in 2013 in constant dollars.

Let me go back, as I always do, to a few of the corporate highlights and then transition to Lee for the detailed financials.

NPI, new product innovation, we've talked about that for six or seven years now.

2013 was an impressive year.

For the year, we launch 47 new products.

Our NPI revenue was up 18%.

More importantly, four of our five business units exceeded our NPI revenue targets for the year.

During the year, we also launched an initiative to re-engineer our process to further institutionalized new learnings and experiences so we can continue to drive growth and strengthen our competitive position for innovation.

As you know, you have something this long, it's going to take time out, re-invigorate it, tweak it, re-invent if you have to and that's what we've done.

It's probably our second or third time we've that in the seven or eight years we've had NPI.

In 2013, we launched seven new products under our Decision 360 strategy.

We currently have 16 active new Decisions 360 product initiatives across three business units that will be launched in 2014.

We continue to leverage LEAN to improve our operating efficiency and leveraging LEAN to speed up time to revenue further enhancing revenue growth.

For example, in WorkForce Solutions, we totally reworked the process for loading new clients into the Work Number database.

This showed a 68% reduction in the time required, improving our service to customers and accelerating the time to revenue.

We also leveraged our expertise in LEAN with our customers, to improve or streamline their operations and their interaction with us.

These initiatives have significantly enhanced our relationship with our customers and made us a more valued partner for future business success.

We see that LEAN at the customer, a truly differentiator in the marketplace.

One that our key customers very much appreciate.

Strategic acquisitions played a critical role in our long-term growth.

Since 2012, we made acquisitions in six countries, supporting strategic initiatives in three of our business units.

We've also exercised our call option to Russia increasing our ownership to 50%, which is the current foreign direct investment allowed by Russian law.

For our strategic acquisitions have been, and will continue to be part of our long-term growth model.

Each of our business units is involved in identification, quoting, and the due diligence activities for all of our acquisitions.

Historically, we have not participated in [auctions before] we can nurture these relationships to better understand opportunities, culture and the integration challenges.

For example, TDX is a great example of that.

For those that we've already met, we continue to identify new applications that were not even contemplated at the time of the original acquisition.

That's important here.

As we buy companies, good solid companies, tuck-in companies, the more we get to know them, we find ways to grow their businesses at ways we had not contemplated within the pro forma.

Our pipeline of strategic tuck-in acquisitions continues to be robust.

We expect to continue to see these opportunities where the valuation and strategic fit is optimized.

I will underscore that tuck-in acquisitions are by and large our focus.

The leadership team at Equifax has relentlessly focused on both the opportunities and the challenges in 2013.

In many respects, and I hope you agree, 2013 was a record year for the Company.

We delivered strong performance in the face of dramatic slowdown in mortgage originations, penetrating new customers and new markets, closing integrated and strategic acquisitions and increased our shareholder value by over $2 billion.

2014 is off to a good start.

We have already closed two strategic acquisitions in our international and commercial businesses and launched a major new Decision 360 initiative that we just talked about in the auto sector.

We believe our diversified portfolio of businesses, investment in strategic acquisitions and the ability to drive core non-mortgage organic growth through innovation and execution will enable us to continue driving value for our customers and our shareholders.

With that, Lee, if you would go through the financials.

Thanks, Rick.

Good morning, everyone.

This morning, I will be referring to the financial results and continuing operations generally presented on a GAAP basis.

As we mentioned at the outset of the call, we had a number of unusual or infrequent items which impacted both revenue and operating income in the quarter.

In order to facilitate your understanding of the operating performance for Equifax and its business units, we have prepared tables attached to the earnings release which reflect our operating performance excluding these unusual items.

The non-GAAP reconciliations which are also attached to the earnings release provide a detailed reconciliation of these non-GAAP measures to their respective GAAP measure.

Our fourth quarter performance was solid and very much in line with what we had expected.

We have a couple more quarters where the mortgage headwinds will challenge us, but so far it's playing out pretty much as we expected.

Looking at the quarter's results, compared to the same quarter in 2012, for the fourth quarter 2013, consolidated revenue of $579 million was up 8% on a reported basis.

Adjusted operating revenue, which excludes the impact of the collection of certain reserved 2012 billings was $571 million, up 7% and up 8% on a constant currency basis when compared to the fourth quarter of 2012.

Operating margin was 26.6%.

Adjusted operating margin, which excludes the collection of certain 2012 billings and the resource realignment charge, was 27.4%, up 190 basis points from last year's adjusted operating margin, driven primarily by operating margin expansion, WorkForce Solutions and personal solutions and lower corporate expenses as a percent of revenue.

Diluted earnings per share attributable to Equifax was $0.62.

Excluding acquisition related amortization and associated tax effects, the collection of certain reserve 2012 billings, the resource realignment charge and the impairment of our investment in Boa Vista, adjusted EPS was $0.91 per share, up 21% when compared to the adjusted EPS at $0.76 in the fourth quarter a year ago.

During the quarter, management of Boa Vista or BVS, our Brazilian affiliate in which we hold a 15% interest, developed a plan to invest more aggressively in technology platforms and market facing capabilities to capitalize on the long-term opportunities in Brazil.

At the same time, reduced near-term market expectations for credit.

And, as a result, credit information services has cause Management to take a more cautious view of near-term growth.

As a result of these changes in plans and expectations, we wrote down our investment in BVS by $17 million.

As non-cash charge related to a non-consolidated investment, we've excluded this item from our calculation of adjusted earnings per share.

We continue, however, to be optimistic about the prospects for BVS in Brazil.

Moving to the individual business units, US Consumer Information Solutions revenue was $256 million.

Adjusted operating revenue was $248 million, up 12%.

The acquisition of CSC which we call our central region, contributed 11% growth and our core non-mortgage market organic growth, including strategic initiatives contributed approximately 7% to growth, while the decline in mortgage market volumes subtracted 6% from growth.

Online consumer information solutions revenue was $170 million, up 12%.

Excluding the central region, revenue was down 1%, driven by the anticipated slowdown in mortgage activity.

Mortgage solutions revenue of $24 million was down 1% compared to the fourth quarter of 2012.

Excluding the acquisition of our central region, mortgage solutions revenue was down 14%, driven by the decline in mortgage activity partially offset by newer information and analytical problems.

This compares favorably to the mortgage bankers application index which is down 51% in the fourth quarter.

Consumer financial marketing services revenue was $62 million.

Adjusted operating revenue excluding the collection of certain reserved 2012 billings was $54 million, up 20% from the fourth quarter of 2012.

Organic growth was approximately 12%.

The operating margin for US Consumer Information Solutions was 41.4%.

Adjusted operating margin was 39.7%, down slightly from 39.8% in the fourth quarter of 2012.

Excluding acquisition -related amortization, adjusted margins have expanded nicely.

Our International business units revenue was $132 million, up 6% on a reported basis and up 11% on a constant dollar basis.

By region, Latin America's revenue was $50 million, up 5% in US dollars and up 18% in local currency, driven by solid double-digit growth in technology and analytical services, as well as information solutions and marketing services.

Europe's revenue was $50 million, up 15% in US dollars and up 12% in local currency.

Good growth in financial institutions, telco, retail and small and medium enterprise along with strong double-digit growth in Personal Solutions all contributed to this strong performance.

Canada consumer information revenue was $32 million, down 5% in US dollars, but up 1% in local currency.

Strength in technology and analytical services revenue was partially offset by a weaker market for marketing services.

International's operating margin was 28.6%, compared to 29.9% in 2012, continuing in the 28% to 30% range at the last two years as we continue to invest in growth and infrastructure.

WorkForce Solutions revenue was $112 million for the quarter, flat when compared to the fourth quarter of 2012.

Verification services with a revenue of $65 million, was down 7% when compared to the same quarter a year ago.

Strong growth in card, government and pre-employment, partially offset a 32% decline in mortgage related revenues.

Employer services revenue was $47 million, up 12% compared to last year.

Workforce Solutions operating margin was 28.9%, compared to 22.6% in Q4 2012, driven by reduced acquisition amortization and improved operating efficiencies.

North America personal solutions revenue was $53 million, up 9%.

Solid growth in our US-based subscription revenue and in Canada, along with the acquisition of TrustedID were the drivers of this growth in personal solutions.

Operating margin was 30.7%, compared to 28.2% in the fourth quarter of 2012, largely driven by lower acquisition expense, partially offset by acquisition related amortization from our acquisition of TrustedID.

North America Commercial Solutions revenue was $27 million, down 3% on a reported basis and down 2% on a local currency basis driven largely by softness in our US risk and marketing data services business segments, more than offsetting growth in Canada.

The operating margin was 32.5% compared to 34.4% in the year ago quarter.

For the full year 2013, consolidated revenue $2.3 billion was up 11% on reported and an adjusted basis and up 12% on constant currency basis.

The full-year operating margin was 26.5%, while adjusted operating margins was 26.7%, up from 25.3% in 2012 driven by operating margin expansion at WorkForce Solutions and personal solutions and lower corporate expenses as a percent of revenue.

Diluted earnings per share attributable to Equifax is $2.69 compared to $2.18 for 2012.

Excluding acquisition related amortization and associated tax effects, the collection of certain 2012 billings, the resource realignment charge and the impairment of our investment in VBS, adjusted earnings per share from continuing operations was $3.60, up 24% when compared to the adjusted earnings per share of $2.91 in 2012.

Finally, last quarter, we alerted you to a comment letter we receive from the SEC regarding our accounting for goodwill and intangibles in the CSC acquisition.

During the quarter, we continued communication with the SEC about indefinite lived intangibles including those assets associated with prior affiliate acquisitions dating back to 2001 to 2005.

However, the issue remains open, and we continue to work to understand the SEC's point of view and resolve the matter.

Any changes to prior acquisition related intangibles and associated amortization, would be non-cash adjustments and would not affect our adjusted earnings per share or cash flow.

Looking forward to 2014, we see a few items that will impact our financial results.

As Rick mentioned, we recently completed three strategic acquisitions in international, one of which closed in January.

These combined with TrustedID and personal solutions and an acquisition in commercial will add nicely to our product and geographic ranges and will add 5% to 6% to our revenue growth in 2014.

We expect these acquisitions to be non-dilutive in their first year and accretive thereafter.

As you all -- second, as you all recognize, we expect the mortgage market to be a meaningful headwind due to the decline in mortgage volume since interest rates increased in mid-2013.

We expect mortgage originations to be down between 40% and 50% in the first half of 2014, compared to last year.

Then, down a more modest 10% to 15% in the second half of the year.

This is very much in line with our views over the past year.

Finally, as you have probably seen, foreign exchange rates for many foreign countries, including emerging markets have experienced significant volatility over the past few months.

Specifically, foreign exchange rates for a number of countries where we compete have weakened versus the US dollar, starting in December and accelerating in January.

We generally expect a certain amount of year-to-year change in foreign exchange rates, but these movements have been more significant than changes we have typically seen in the last few years.

The two markets that will impact us the most are Argentina, whose currency depreciation accelerated in December and then dropped 19% in the month of January -- from the month-end December.

In Canada, where weaker foreign demand for oil and minerals have weakened the Canadian dollar.

The impact of these foreign exchange movements are significant for us because these two countries are among our largest foreign operations and they have strong leadership positions with above average margins.

Along with movements in select other currencies, we expect foreign exchange rates in 2014 will negatively impact our reported revenue growth by approximately 2% and will impact our adjusted earnings per share by $0.05 to $0.07 per share more than we had previously expected.

Because of the impact of those three factors, acquisitions, the mortgage market headwind and foreign exchange, it's not uniform throughout the year, particularly as regards mortgage, we will provide a more detailed view of 2014 than we have in past years.

For the full year, we continue to expect core organic non-mortgage market growth in our target range of 6% to 8%.

Acquisitions should add 5% to 6% growth, while mortgage, on average for the year, will reduce growth by about 4%.

Foreign exchange will reduce growth by about 2%, based on our current expectations.

We expect this will result in constant dollar revenue growth approaching 8% to 10% and reported revenue between $2.425 billion and $2.475 billion.

For the first half, core revenue growth will also be 6% to 8%, while the mortgage impact will reduce growth by about 6 percentage points, given that higher market decline we expect in the first half versus the second half, until we anniversary last year's interest rate increases at midyear.

Acquisitions are expected to add 5 percentage points to 6 percentage points of revenue growth and foreign exchange will subtract about 2%, yielding 3% to 5% growth for the first half.

In the first quarter, the mortgage impact will be slightly greater, about 7% negative, and at the peak impact for the year, while the acquisition benefit will be slightly less in the range of 4% to 5%, as we will have less than a full quarter of acquisition benefit on two of the acquisitions.

As a result, we expect reported revenue for the first quarter to be between $575 million and $588 million.

For the second half, again, we expect core growth of 6% to 8%, but only 1% to 2% negative impact from mortgage.

Acquisitions should add 5% to 6% to growth.

Foreign exchange is expected to subtract 2% from growth, leading to an 8% to 10% total revenue growth for the second half.

With regard to profitability, as I noted earlier, the acquisitions will be non-dilutive in 2014, which means the revenue growth will not contribute appreciably to EPS growth until 2015.

Operating margins will decline slightly due to certain first-year integration expense and acquisition amortization, although operating margins excluding the acquisitions will increase consistent with our long-term operating model.

Our tax rate is also expected to increase from 35.6% 2013, to between 36% and 37% in 2014.

As a result of these forces, adjusted EPS is expected to grow between 4% and 8% from 2013 to $3.75 to $3.89.

Adjusted EPS may be down slightly to flat in the first two quarters, when integration expenses and the seasonal pattern of revenue in the acquired businesses will cause the acquisitions to be slightly dilutive, then up single -- high single-digits to mid-teens in the second half as the impact of the mortgage market diminishes and the acquisitions begin adding to earnings per share.

We don't normally look beyond one year in our public comments but it's important for me to put this in context.

In 2012, we had a great year driven by 7% core growth and a strong mortgage market yielding double-digit revenue growth and 18% growth in adjusted EPS.

In 2013, we had an even better year driven by another year of 7% plus core growth and the benefit of the CSC acquisition, yielding 11% revenue growth and 24% growth in adjusted EPS.

In 2014, we expect another year of core growth solidly in our target range, but with the mortgage and foreign exchange headwinds, we expect 2014 to be a little below our long-term target performance.

However, our three-year cumulative performance will be well above our long-term goals.

Importantly, as we look at 2015, our long-term business and financial model is clearly intact.

We will continue to target 6% to 8% core growth and have shown the ability to add to that through intelligent strategic acquisitions.

Early forecasts for the mortgage market suggest that mortgage origination activity will return to growth in 2015 adding to our total reported growth.

Our recently completed acquisition should also become accretive.

If we only pursued a normalized level of acquisition activity during 2014, share repurchase during the year will lead to a decline in shares by 2015 adding further to the EPS growth.

As you can see, while short-term factors may cause our results to vary from our longer-term targets in individual years, the underlying dynamics of our business and our Management's ability to deliver against core growth and margin improvement objectives makes our business an attractive one with continued good prospects.

Let me turn it back to Rick.

Thanks, Lee.

We started 45 minutes ago talking about a number of moving parts.

It was our intent to provide you with a new level of transparency and insight to 2013, 2014.

Lee also gave us insight into 2015, so hopefully you felt we met that expectation.

So let me summarize before we go to Q&A.

Despite the headwind in 2013, our strategy and execution delivered an impressive broad-based performance.

The business model continues to be sound and the strategy we've been executing against continues to offer attractive growth opportunities.

The road map that Lee just gave you, details the transitional nature of 2014.

We fully expect to exit this year with very good momentum, positioning us for stronger performance as we enter 2015.

Given our outlook for 2014, we have increased our dividend 14%, so $1 per share for the year.

This represents what we expect to be the payout ratio at the upper end of the Board's policy, which you can recall is 25% to 30% of our net income going back in the form of a dividend.

In summary, for 2014, core organic non-mortgage growth, 6% to 8% remains solid and within the model we've given you over the past few years.

Mortgage market performance will be as we anticipated and as we've communicated to you over the past year.

Foreign-exchange is a headwind this year but should abate as we lower -- lower economies had stabilize in the future.

We should move up to an 8% to 10% revenue growth range in the back half of 2014.

We should be aided by the mortgage market returning to growth latter part of this year and into 2015.

So, with that, operator, we'd like to open up for some questions.

(Operator Instructions)

Georgios Mihalos, Credit Suisse.

Just looking to reconcile some items.

You called out a 32% decline in mortgage-related revenue for workforce solutions -- for mortgage related revenue.

Mortgage solutions was down about 14%.

Why wouldn't we see those two numbers converge a little bit more?

Why is mortgage solutions outperforming workforce there?

We can give you some details.

It's a couple things.

One is, the 1% in USCIS that then moved to 14%, was for mortgage reported revenue.

So it's 1% including CSC.

If you exclude CSC, it's the 14% that you alluded to.

That's just mortgage reporting that was online -- there's other mortgage rate of revenue streams that are not captured in the 1% or the 14%.

That's number one.

Number two, as we've always stated, there's some timing differences between EWS and USCIS.

Number three, we've been at the differentiated products in mortgage longer in USCIS, things like UDM and others, than we have in EWS.

We don't break that detail out.

But if you were to normalize it, you'd probably find that USCIS total mortgage, when you exclude CSC, is closer to that of what you saw in EWS.

Okay.

That's helpful.

Yes, George.

I would add that pure Tri-Merge activity within mortgage services was down in the low- to mid-20%s, and the difference between that and the 14% organic was some of the newer information analytic-based products that we sell in the mortgage market that are actually still gaining traction and increasing share, even in a declining market.

Just the pure market activity effects are a lot more similar than the headline numbers would make it appear.

Okay.

That's great color.

Then moving on, if you can update us as to your expectations around the CMS contract for 2014, and maybe how you are thinking about it beyond?

We are still very optimistic.

Long term, this is going to be a great revenue generator for EWS and for Equifax.

You've seen and read about all the trials and tribulations that the Affordable Care Act has had in rolling it out.

There are a number of things that Dann and his team are trying to do now to help the CMS get to a greater coverage with all tier two.

We continue to get very excited about the analytics that eThority is bringing to the table.

So, it's not a huge number that we are anticipating in 2014.

It will be bigger than 2013.

I'm hopeful as we exit 2014 and this thing starts to click in 2015, that we'll do some really, really good revenue for us.

Great.

Last question for me.

I know you called out acquisitions in aggregate.

But, can you comment a little bit more on the contribution from the TDX acquisition?

I know it was $90 million in 2013.

Is that going to be somewhere around $100 million of revenue contribution for 2014?

That's a reasonable estimate.

Okay.

Great.

Thank you guys.

Andre Benjamin, Goldman Sachs.

My first question, what is the magnitude of incremental revenue opportunities, specific to some of the new verification products that you rolled out in auto vertical, and do you have any more products in the works there?

Or are you pretty much done?

Are there some other verticals that you see as low hanging fruit or good near-term opportunities?

Thanks, Andre.

The verification opportunities in the auto -- D-360 solutions we just launched.

You should think of those as being incremental margin, very much like the rest of the work number -- very, very high margin.

As I alluded to, in decreased fixed fee in general terms, I can't remember the number now.

But we have double-digit pipeline of D-360 that will be launching in 2014.

So that robustness of NPI, new revenue from NPI, in verification services and beyond, will continue.

Okay.

Then in terms of the North America commercial solutions segment, in term of the small-medium businesses -- can you talk a little bit about what the competitive dynamics you are seeing there, what's your current level of commitment and investment to that segment versus some of the others that you talk a little bit more about?

And maybe where some of the successes gaining share are versus not?

Good question.

We are as committed to commercial as we are any other business.

We don't talk about it as much because it's a smaller business.

That said, but we continue to invest.

I mentioned in acquisition.

Small tuck-in acquisition, we just made for commercial.

We invest in platforms, we invest in products, we invest in people.

So, it's a market that's always going to be there.

It's going to go through cycles like the consumer piece is.

But I think it's important for us as a business to continue to build out a sizable, successful commercial business to augment what we do on the consumer side.

Thank you.

Paul Ginocchio, Deutsche Bank.

Just a question about Brazil.

It looks like the charge is about 27% of the book value.

That seems pretty significant.

Has it been a marked slowdown to start the year in Brazil?

Or is it more just about the reorg and the investment opportunity you need, or the investment you're making to capture the opportunity there?

Thanks.

Sure, Paul.

It's both.

The only caveat I give to your question, was it's not just the recent slowdown.

If you look back the last couple years, the GDP has slowed, the use and the demand of credit products has slowed.

If you follow experience, historical growth patterns in Brazil [as they've noted], that's good proxy for what the market sees.

We obviously haven't showed that level of detail because we don't consolidate Brazil.

But there's no doubt that the Brazilian economy has slowed.

Secondly, we are investing, as you noted, and we've talked about now for a number of years, in two pretty very important areas.

One is, integrating the core platforms in which we operate, which is important to do.

It simplifies and shortens your time to market for new products.

That's a heavier investment than we anticipated early on.

We also are investing in positive data capabilities in IT.

That's still maybe multiple years away.

But it's important we invest now, so that when the country embraces positive data, we are in a position to jump on that.

And third is, we will continue to invest in sales people and sales processes.

I was just down with Paulino last year, and we are still committed to Brazil.

I think it's a place we've got to keep our pulse on and stay actively engaged.

I believe in what Boa Vista is doing, combined with TMG and our leadership.

So while it was a non-cash write down for the fourth quarter, we are still committed short term and long term to Brazil.

Thanks for that, Rick.

Appreciate it.

And maybe just a little -- has there been an even further slowdown into the first quarter?

I don't have any data on the first quarter at this time.

I think if you look throughout 2013, you would see the year continued to slide throughout the year in Brazil.

Thank you.

Andrew Jeffrey, SunTrust.

Just trying to catch my breath after that.

(laughter) Rick, lots of moving pieces.

Could I just have you summarize, if you look at the business from 30,000 feet, when you look to 2014 versus, say, where we were a year ago, core business, noise notwithstanding -- better, worse, the same, as far as the growth and profitability profile of Equifax compared to 12 months ago?

I'd say better, and it's for this reason.

The core business, the core organic non-growth business is as solid today as it was a year ago.

I think we'd all agree, last year was just a great year, building on a great year of 2012.

And 2014 and 2015 will be solid.

It is better for this reason.

TDX is a strategic acquisition that gives us capabilities that we didn't have before, that will start to monetize, I think, in very meaningful ways, the back end of this year and into 2015.

The connect capabilities to new geographies, existing customers in new geographies, I'm very hopeful that that is going to bode very well for us long term.

The other point I'd make is, we get smarter and smarter every day in this verticalization and enterprise selling that we're doing for USCIS.

Andrew, I know you know this, but we are taking the commercial products, we're taking the verification of employment products, verification of income products, taking all the products we had to bear to our core customers in the US, and differentiating our offering from anyone else.

We've been at it a couple years.

Each and every day that goes by, that gets better and better.

Okay.

If TDX is your call-out, in terms of incremental excitement in 2014, when you look at the core business beyond the acquisitions, what are the things about which you're the most enthusiastic?

I just think the execution of the team has delivered now for four or five years in a row, continues to hum.

So it's the things like NPI, it's the verticalization that we have.

If you've seen some of the releases we've had, for example, in auto, that is a true differentiator that no one else has done.

We get smarter and smarter, as we get the lean expertise in each of these verticals.

That in itself isn't a solution.

Anybody can do that.

Just saying that vertical expertise, with the unique data assets we have to accelerate growth.

With that, obviously, our D-360 is another thing that really excites me this year.

So auto has been a pretty important share driver for you?

Yes.

Lee, just a couple of housekeeping questions, if I may.

What do you anticipate the net acquisition-related amortization to be this year?

Andrew, I don't have that off the top of my head.

We would have to get back to you on that.

Suffice to say, it's up?

It's a significant number, yes.

Yes, okay.

As far as the tax rate is concerned, you called out the FX headwinds.

You called out the mortgage headwinds.

Do you have a sense of what the higher tax rate is costing you, just in terms of reported earnings?

Yes.

That's actually a couple of cents a share.

If you take from 35.6%, call it, to the midpoint of the 36%, 37%, 0.9 point on $500 million, $600 million of pretax.

You are talking $0.03, $0.04 a share.

Okay.

Finally, puts and takes notwithstanding, again, and this may be more of a question directionally as we look to 2015.

Is there still some operating leverage left in the business?

I'm thinking more about EBITDA, because of all the intangibles, amortization now.

It's a great question because it will get muddied through the acquisitions in 2014.

Even on the EBITDA line, as well, because of some initial expenses we incur as we integrate the companies.

But, both on an operating margin basis and what I call cash margin, it's not EBITDA margin.

The cash margin, the way I look at it, would be operating profit adding back just the acquisition amortization.

Both of those measures will get better on our core business in 2014, if you take out the acquisitions.

So the underlying model remains intact, and then as we have some experience with those new businesses, we will expect those, partly through expense management, but a lot of it from revenue leverage, given the growth prospects of those businesses, those will start contributing to widening.

So, yes, I think the margin model is intact.

Okay.

Terrific.

Thank you.

Thank you, Andrew.

(Operator Instructions)

Manav Patnaik, Barclays.

Thank you for all that color you gave for the guidance.

Can I just ask on the margin side, you said for the full year, it's going to be flat to slightly down.

Are there any specific -- within the segments, that you need to call out in terms of -- in the direction moves that would be different that what we've expected in the past?

Let me jump in, [we generally] still give some more color.

That's largely being driven by the fact that you've got some acquisitions coming on with increased revenue and in the first year, not adding a lot of profit.

We call that as being non-dilutive.

That's putting a little bit of margin pressure.

The fundamentals of each of the five business units, from a margin perspective, are largely intact.

We have slight movements quarter to quarter and year to year for each of the business units.

But at the Company level, most of it is being driven by adding the revenue we're getting from TDX and Infinix without adding profit for the bottom line.

Do you have anything else, Lee?

I think the key place you will see some downward margin movement, and it's because of the acquisitions, it's going to be international.

That's where the bulk of the acquisitions have occurred, and you will see that affect international margins by a couple hundred basis points.

Okay.

Then, big picture, Rick.

I think you mentioned, it was 47 new products this year.

I think in the past you've been in the mid-60s range.

That number means a lot from a year-over-year perspective.

Just on your NPI targets, 10% was your range.

Your comfort level with all the good work that you've been highlighting.

Is that becoming a conservative target?

Or do you still stick around in that 10%?

I still think the 10% makes sense.

I will give you some more color in a second.

The 47 that I mentioned in my opening comments, one of the things we did get done is re-energize.

We've done this a couple of times now, with NPI, put the focus on it again.

One of the things we decided to do, very intentionally in 2013, is focus on a fewer, larger products.

We traditionally get into 65 or 70 products per year.

Our goal is to reduce that.

We didn't target 47 specifically, but a reduction in larger, more meaningful products.

That's what you saw last year.

Revenue was up 18% year on year from NPI, so an extremely healthy year.

Long term, I still see a vitality index of 10%, it's kind of the right range for us.

You are going to have ebbs and flows as you sunset large classes one year.

Maybe the next year you don't have large classes, you sunset so you'll be above the 10%.

Yes, I think six, seven, eight years into NPI, that 10% number is going to make sense.

That's 10% of a larger number, as you might guess, obviously.

Yes, correct.

Fair enough.

One last one.

I was just wondering on the PSOL side, you obviously have some headwinds out there with the data breaches and all those sorts of issues.

I was just curious, is there a potential tailwind now that a lot of these banks are giving the FICO score for free, and then you get your free credit report?

Does the combination of the two maybe have any impact on your underlying PSOL business?

Yes, Manav.

I think that's a great observation.

I think the likely growth expectation for PSOL probably is moderating, which helps us a little bit, as you see more breaches out there.

But you're right, the banks, number one, the banks are under some pressure relative to the way they sell add-on products to their customers, as a result of the way the regulators view any kind of cross-selling activities.

And, you are seeing an increased presence in the marketplace of some free models, which are based on lead generation for other products.

So, I think you might see a little bit more moderate growth in our PSOL business over the coming year.

The flip side, Manav, which you don't really have the benefit of seeing what we do, is the PSOL business is gaining traction, accelerating with faster growth rate outside the US.

So, the thing that we're doing, taking PSOL and other great tools and capabilities that Tri has built, again, into Canada, UK, now Latin America helps.

And we're at the early days of really understanding what we can do and how far we can take TrustedID to build our capabilities for both partners, which as you know, is new to us, as well.

Thanks a lot, guys.

David Togut, Evercore.

This is Mike Landau in for David.

Thanks for taking our questions.

Can you talk a little bit about the competitive landscape that TDX would participate in when you bring the product to North America and maybe quantify the opportunity in the region?

Yes, Mike, you should know this.

One, we did a very -- let me back up -- my comments alluded to this.

We had been working with TDX for about two years to really get to know the culture, the people, the management, the pipeline, the capabilities.

We did very thorough studies, brought consultants in to help us understand their uniqueness versus competition in the current footprint in the UK, expanding in Australia, as well as their uniqueness in countries where they were not -- places like Canada and US is two obvious ones.

The second point I will make on TDX is, we did not contemplate any acquisition with justification of the purchase price, TDX coming to the US or Canada at this juncture.

There's enough growth short term next couple years to grow nicely in the current footprint.

We will very systematically think through the launch plan.

In fact, I've chartered, Paulino and Rudy Ploder with putting that launch plan in place by the end of this year so we can really understand all the nuances of who is in US, who is in Canada, and how you systematically make this thing work in those two countries.

But the business has to stand on its own merits in the current geographical footprint.

Great.

Thanks.

I know you had a quick comment on acquisition-related amortization expense.

Would you have an idea of the impact of just TDX to that number?

Yes.

I'm sorry, I do not have that with me.

Okay.

All right.

Thanks.

Jeff Miller from Baird.

Actually, a follow-up on the NPI's and vitality index.

Rick, should we think about, looking back over the last couple of years, is the vitality index the accumulation of a lot of singles and doubles, or are they any triples and home runs that you guys have hit that you can discuss?

Yes, it's great.

I tend to think about homerun is a transformational from a revenue perspective.

If that's how you define it, which is how I do define it.

Those are few and far between.

I think we've got lot more singles and a lot more doubles financially.

However, what you can find, is there are some things that disrupt the marketplace, that over time allow you to get additional revenue streams from add-on products, if you will.

So, trying to change the homeruns, I think, is a bit of a gamble.

That's why you see us in the range of 47 products last year up to I think our high, ever, was maybe 70-something.

If they were homeruns, you'd find these being in 5, 10, 15 products, so that's a big risk.

Okay.

On the key client program.

It seems like you continue to add clients one, two at a time.

It's still relatively small number, seems like it's going well.

Why not roll it out faster?

Is it just that you need to add headcount to that organization?

Or, is it that there is only -- call it 10 to 20 potential accounts that could be slotted into there?

Good question.

Probably requires some clarification.

Think about KCP under the same banner of verticalization -- there's no difference.

So, I go back, I think it was 2007 or so, in the recession, where we're looking at the banking sectors.

What might the banking sector look like post-recession versus pre- the emergence of four very large, powerful banks, seemed inevitable.

I wasn't confident in our positioning with all four of those banks at that time, so we created KCP at that time.

We then added on larger, more strategic accounts -- two that I just talked about, that's now eight.

But beyond that with the KCP accounts, we've got vertical focus now in mortgage, we've got vertical focus in auto, we've got vertical focus in telco, probably missing a few more, as well.

Retail banking.

So, verticalization in total, of which KCP is one element, has really transformed our going market approach over the past six years.

And KCP is one piece of that, and that's looking very well.

By the way, if I can tag a completely unrelated comment onto that.

We've had two questions about acquisition-related amortization.

I've been shuffling through my papers here.

I would tell you the acquisition, in total acquisition-related amortization looks like it will be up around $15 million to $18 million year over year.

Again, the biggest impact will be in our international business.

That $15 million to $18 million is actually a net number, because we will be down some and we will see some benefit in workforce solutions as we complete the amortization of certain assets from prior deals.

But the net for the Company will be up $15 million to $18 million.

Thanks.

I knew it was only a matter of time before you found that, and it came up in that binder.

Thank you, Lee.

Okay?

Thanks, Jeff.

Shlomo Rosenbaum, Stifel.

Just wanted to focus a little bit more about the demand in the core market.

You are seeing consumer financial marketing has had very good growth for the last three quarters.

You guys are working out the concerns that the banks had in terms of using the IXI data, or is it really that you are seeing good pick-up in the core marketing to consumers, within various aspects of the business that's much more related to, what I would say, the core business?

It's a combination of both, Shlomo.

We have new leadership in IXI.

That, combined with our legal team really working with the customers to understand what the regulation really means and doesn't mean, has helped.

You are also are seeing the pre-screen business continue to increase.

Their bank card business is up 8% to 10% per year versus loan, still well below the pre-recession highs of pre-2009.

But, yes, we're clearly getting market-based momentum, market share gains and improvement in IXI.

So, if I want to isolate the market share gains that you guys are doing over there, would you say that we are starting to see the banks -- excluding the auto that everybody's talked about just on the pre-credit card thing -- are they loosening up the credit standards?

Or is it a matter that you guys are able to go ahead and help them dice the market better because of your analytics and you need data, and therefore you're getting better growth there?

It's a combination of both.

For example, there's no doubt that the banks are getting a little more aggressive in the lending standards.

For example, if they're going to be more aggressive in auto, go down the score chain, they're requiring a larger down payment or deposit upfront.

So they're all looking for ways to grow in a reasonable risk base, and our ability helps them make those decisions with our Decision 360 -- helps us differentiate and gain share.

Okay.

Just in commercial, can you just give us a little bit more detail?

You had three really solid quarters, and then quarter over, things dropped down.

I know that things bump around.

Is it really project-related revenue timing?

Or is there anything changing underlying in that market?

I don't think there's anything underlying -- it's so small, and this is not in a derogatory sense.

It's a small business, Shlomo, so going from -- I don't have the math in front of me -- going from, I think it was negative 3% in the fourth quarter to positive 10% is a small swing in total dollars.

So you could have nuances and movement quarter to quarter.

I pay more attention to the long-term trajectory of the business.

I still remain committed that that was a growth business for us.

And it did grow 7% in 2013.

In light of what you are seeing in PSOL, can you give us more long-term expectations?

The revision that you guys have in your own mind in terms of what to expect of growth over there over the multiple years?

We came up with a growth model that provided for PSOL long-term.

Upper single digits.

Long-term.

With a margin profile of [X]?

That margin profile, mid-to upper 20%s.

I think, Shlomo, that long-term model still exists, even though there may be some pressure you're seeing, PSOL going to the upper end, if not outside that range for a number of quarters, if not years.

We are seeing some moderate slowdown, and we expect that to continue in the regulatory environment.

It is unknown, so our challenge is to find ways to innovate, take trusted ideas in levels.

I still think we are in that long-term model, as I told you guys a number of years ago, upper single-digits in the margin profile that we talked about.

Okay.

It's really, it's just a bit of coming from above that range to just within that range?

That's all we are talking about here?

That's a great way to think about it.

Okay.

Thank you for taking my questions.

(Operator Instructions)

Bill Warmington, Wells Fargo.

Rick, I had a question for you.

You've thrown out the vitality index being 14% of revenue for international.

Did you give that also for the Company as a whole?

I did not.

I think what I was talking about was the entire revenue was up about 18% year on year, but I think the vitality is around 9%, in my memory, Bill.

About 9%, currently?

For 2013.

Got it.

Then, Lee, the CSC had provided some pretty healthy revenue margin benefits in 2013.

Can it continue to help performance in 2014?

Is there more juice in the lemon, so to speak?

I think in what we've captured, most of the margin benefit the first quarter will still be advantageous year-over-year because we had some initial expenses in integrating CSC in the first quarter last year.

Now, I think we are into the steady process within USCIS of driving a little bit of growth every quarter, and getting them to perform fully at the levels that we think is possible.

That's much more of a steady, year-by-year effort.

Got it.

Then, I wanted to ask about the collections market today, in terms of what's the opportunity there for Equifax?

It's a place where you been making investments -- Infinix, TDX.

I've always thought of it as a fairly mature market.

Some people call it the second oldest profession.

That's good, Bill.

(laughter) Think about it this way.

It's servicing -- one, we are in collections today.

I think you know that.

We do collections in many geographies around the world.

It's an important offering that we must have for our customers.

Two, think about TDX as kind of a SaaS model, which is right up our sweet spot, that's what we do.

Think about it as analytics and technology platforms, as right what we do today.

So, they are a very, very powerful player in the UK, and having great, early successes in places like Spain.

So, I am confident we can bring that capability with our bigger pipes.

We've got far bigger a distribution network than they do.

Their capability is for current customers and new customers.

In a model, it's very financially friendly to us, SaaS model.

Think about it, Infinix is a little different.

If you go more vernacular, and you define TDX more akin to InterConnect, it's sophisticated, it's upper end in its capabilities, that's TDX.

If you think of a decisioning platform we have across Central and South America, Experto, it really fits those market needs.

Infinix is more like an Experto for us, so it's same concept there.

They're good, really in Mexico, plus a few other countries, we've got the largest footprint in Central and South America.

We can bring their product through our pipeline to our customers and add value.

Got it.

Thank you.

Last question, was helping banks comply with regulation as a revenue driver, getting better, weaker, flat?

Early stages.

But hopeful.

I think as an industry, including banks, long-term, going to successfully navigate the regulatory environment, we're going to have to do it as partners.

And that's our intent, was to reach out proactively to some of the larger banks out there last year and proactively help them, because if we can help them become more compliant, on data accuracy, as an example, that helps us.

So early stages.

Thank you very much.

Brett Huff, Stephens, Inc.

Two questions.

One is, on the restructuring, you haven't talked much about that.

Can you give us a sense of where the restructuring happened?

And I'm less concerned about the current period costs and I'm more interested in, what are the benefits in terms of better margins, will we see them here -- where will we see them, and when will we see that?

I will take a crack, and Lee, add on if you would, please.

One, in the scheme of things, the size of restructuring we took is relatively de minimis.

We take restructurings, repositionings, very, very seriously because it affects peoples' and families' lives.

But, the economic environment in which we operate isn't static, it is very dynamic.

The opportunities you may have in one part of the world are not static, it's dynamic.

So, our challenge as leaders is to always make sure we are reallocating, repositioning our human capital resources and financial resources in order to get the best return.

So it's nothing more than that, and taking some areas that were offered lower growth and in cutting back expenses there, and repositioning to higher growth areas.

So that is a normal process.

In my 8.5 years here, that we have done so many times over 8.5 years, this is a little bit more meaningful and hence, we called it out as a non-GAAP item.

As part of margin impact, Lee?

I think the thing to think about on margins is, that we continue to expect to grow our staffing over the course of this year.

It will be at a modest rate, and in line with the recognition of where our revenue for our year is going to grow.

So, this really is much more about realigning resources to where the best opportunities are helps us accommodate the softer revenue we will see in the first half of the year.

But for the year as a whole, you take our revenue growth, subtract a couple percentage points that has to go salary increases, merit increases.

That's going to give you just about what our headcount growth will be, and that's consistent with brass models.

So it's not really a margin driving action so much as staying focused on where the returns are.

Okay.

The second question is, and people have asked a little bit about NPI already.

But can you give us a sense -- you've been at it, I think you said, six or eight years, with a very systematic way of hitting singles and doubles and hopefully getting some triples in there, too.

As you guys look forward, how much of NPI is going to come from brand-new data sets versus analytics or add-on products from existing data sets, so we have a better idea of how proprietary some of those NPI revenues are?

That's an interesting way to ask it when you think about the product.

I would say this -- if you think of a continuum, I think the next three years, the greater NPI growth comes from mining the current unique data assets we have around the world more fully.

There's a lot of juice, as I had mentioned earlier in a comment, when I commented about juice left, and a lot of juice left in just mining the current data by taking those unique data assets to new verticals with new data, with unique domain expertise.

The auto example is a prime example.

We've had the wealth data, the employment thing.

We've had the income data.

We've had all those data assets now for a few years, but getting domain expertise in the verticals to focus on it and bring those through to deliver new products is an example, I think there's more opportunity over the next three years.

We will always go out looking for the next unique data asset.

We've got a lot more we can still do on mining that we have today.

Great.

That's helpful.

Thank you.

Andrew Steinerman from JPMorgan.

I was hoping you could make a comment about credit card applications.

I definitely heard you talk about pre-screen being up in the quarter.

Do you think that was just Christmas holiday-related?

What's your sense of credit card application as we're going into 2014?

Often, it's a very big driver for you, but it hasn't for a while.

I think this way, Andrew.

Since the low is the trough of the recession, you are steadily seeing that increase in the last couple years, anyways, of the upper single-digit range, and we expect that to continue.

It's still, I think I mentioned before, 39%, 38% below the pre-recession peak.

We know we're closer than we were before the recession, but I expect that to continue in 2014 and up.

Great.

You're not just talking about the pre-screen, you're talking about the follow-through, where you get the application, you get the consumer credit report, as well, right?

Yes, Jeff.

I have not actually tracked the linkage as we've done in the past between pre-screened and credit file pull.

I don't have that number off the top of my head.

If you remember, there was a very strong correlation, pre-recession, I think it was a 30- to 45-day lag between pre-screen and credit file approval.

That lag was impacted dramatically from the recession.

I can't tell you exactly where it is today.

But eventually, yes, pre-screen leasing pools were up as well.

All right.

It sounds like moderate recovery?

Yes.

Okay.

Perfect.

Operator, I think that's about it.

We're about a half hour over our normal time, unless you have one more question that has to be asked from the phone.

At this time, there are no further questions in the queue.

Mr. Dodge, I'd like to turn the conference back over to you for any closing remarks.

Okay.

I want to thank everybody for their time and their interest in Equifax, and I think with that, we'll conclude the call.

Thank you, everybody.

Again, that does conclude today's teleconference.

We thank you all for your participation.