易速傳真 (EFX) 2014 Q1 法說會逐字稿

Good day, and welcome to the quarter-one 2014 Equifax earnings release 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, and good morning, everyone.

Welcome to today's conference call.

I'm Jeff Dodge, Investor Relations, and 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 the filings with the SEC, including our 2013 form 10-K and subsequent filings.

We will be referring to certain non-GAAP financial measures, including adjusted EPS attributable to Equifax.

It will be adjusted for certain items which affect the comparability of the underlying operational performance.

Adjusted EPS attributable to Equifax excludes acquisition-related amortization expense and the associated tax effects.

This measure is 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 at our website, for further details.

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

Thanks, Jeff, and good morning, everyone.

Thanks for joining us this morning.

As I always do, I'll start off with a couple of high-level comments on how the Company performed in the first quarter.

I'll then gravitate towards some details at the business-unit level, and then come back to the corporate level and give you an update on a couple of key initiatives Company-wide.

And Lee will go through his detailed financials, and I will come back and give you a look at second quarter, balance of the year, and then we'll do some Q&A.

First-quarter performance, in our opinion, was solid.

We came in a little better than we'd initially expected.

All of the business units continued their strong execution of their strategic initiatives, and that enabled us to offset both the mortgage and the currency headwinds, which we described to you during our last call for the fourth quarter.

For the first quarter, revenue was up 3% to $585 million on a reported basis, and up 5% on local-currency basis, which is the first-quarter 2013.

The strategic acquisitions, which we recently completed, are enabling us to further leverage our core business assets and drive new sources of growth.

Early-stage integrations are off to a good start, and we're optimistic that all of the acquisitions we made late fourth quarter and first quarter will bode well for us going forward.

For the quarter, our core non-mortgage market growth rate was 7%, solidly in the range we had targeted of 6% to 8%.

Operating margin was 26%, down slightly from 26.3% a year ago; and our adjusted EPS was $0.89, up from $0.87 last year.

Now going to the individual business units, starting with the USCIS: They delivered another solid quarter, with strong execution on their initiatives.

Consistent with our expectations, USCIS core non-mortgage market organic growth for the quarter was a solid 6%.

They are continuing to leverage innovation to develop and deliver unique insights for their customers through partnerships and multi-product offerings that leverage our unique capabilities, and I'll give you a few examples there.

First is: We've announced recently a partnership with HIS, and you remember HIS purchased Polk last year, so [we've announced] this partnership, we're going to develop product offerings for one of our focused verticals we talked to you about and that's automotive.

Our first product is a lost sales analysis for lenders, which helps them understand actual situations where they lost good opportunities to a competitor, and help them build a strategy to not lose those in the future.

Off to a great start, and automotive is going to be a great growth vehicle for us going forward.

Another example: We've identified a number of opportunities for integrating multiple data assets along with some of our proprietary analytics to develop what we call super scores that enable our customers to make better decisions on higher-risk opportunities -- opportunities they would normally pass on, and now are able to underwrite those risks.

The market interest is increasing nicely; customers are increasingly focused on growing their running portfolios.

We talked about mobile commerce.

We've got a great initiative with a partner called Jumio -- they are a next-generation payments and ID company -- and to help our customers maximize their opportunities with mobile commerce, while reducing fraud and streamlining mobile payments -- really exciting early-stage opportunity.

In the mortgage space, we continue to bundle undisclosed debt monitoring, which we've talked to you about -- our 4506-T product, verification of employment, verification of income, and we bundle all those products through a very unique decisioning platform, which we have in the mortgage market.

And these solutions are allowing us to increase our market penetration and to drive growth.

This continuous innovation in this large market has enabled us to mitigate the impact of the market decline, while positioning us to accelerate faster when the market conditions improve.

You've seen the MBA data for the quarter; you've seen how we've outperformed the MBA.

We'll talk about that in the Q&A as well, and that's largely driven by our unique offerings and our unique decision platforms.

In fraud and ID management, we've made significant progress, particularly in the government sector.

We are providing identity authentication for selected IRS portals in support of their strategic goals for reducing fraud, improving service, expediting processes, and improving efficiencies.

We've also undertaken projects for Health and Human Services, leveraging our proactive fraud solutions products.

And we continue to sign new accounts in the state agency market with identity proofing services.

International: It's a critical long-term growth area for us.

In the first quarter, it performed well; retained a little over 24% constant-dollar growth, driven by solid organic growth, in addition to contributions from the recent acquisitions.

We are in the midst of integrating TDX; you recall we -- quite a few hits recently.

And we're aggressively working on a plan not only to integrate them, but to take their capabilities and solutions to countries outside of their current footprint.

They are predominantly, if you recall, a UK-based company, with operations in Spain and Australia.

We have high hopes that this is going to have a fit in places like Canada, Argentina, Brazil and the US; and the teams are working diligently to lay those plans out for execution later on this year.

We now have InterConnect implemented in five additional countries, with a sales pipeline that extends into six other countries.

InterConnect will ultimately enable us to deliver Decision 360 type of products in these countries; and most importantly, as you know, we'll get these decision platforms ingrained into our good customers.

Our stake in this goes up significantly.

In our non-consolidated investments overseas, both Russia and India are exceeding our expectations.

We've also made very good progress with our Brazilian partners, and expect solid growth with them in 2014 and beyond.

Following outstanding performance in 2013, workforce solutions delivered core non-mortgage market organic growth of 10% in the first quarter; another outstanding quarter for workforce solutions.

They continue to deepen our penetration of many of our existing served markets, while broadening the markets they serve with unique high-value products.

For the first time in a long time, home equity lending is up dramatically, and the need for employment and income verification services provides new growth opportunities for us.

We're at the very early stages of home equity lending coming back, and late in the first quarter we started seeing the benefit of that, and we expect that to continue throughout the balance of the year.

One of workforce solutions' newest offerings is getting very good traction.

The solution offering, the ACA Management Platform, provides customers with automated dashboards that enable them to evaluate, track, and report their compliance with the Affordable Care Act.

If you recall, a few years ago we acquired eThority, which was an HR analytics company.

We leveraged that capability to help our customers, employers, ensure they're compliant with the Affordable Care Act.

We have now signed up more than 100 major organizations with this platform to ensure they are compliant -- exciting for those guys.

Another way we're bringing analytics to every part of our Company, now including EWS.

We're also making good progress on our targets of the Work Number database.

We now have almost 3,400 companies contributing their Work Number records, up 7% from year end.

And our records are now exceeding 240 million in the database.

We are well on our way to reaching our short-term goal, which we talked to you about, of 250 million total records and 70 million active records.

We'll soon come back to you with a new baseline for your larger target going forward and you know the implications of that.

Finally, our contract with CMS, the Center for Medicaid and Medicare Services, was renewed for another year.

If you recall, we signed the contract a year ago; it was a one-year contract with one-year renewals.

They've come back and have renewed it.

We could talk about that in the Q&A session as well, but getting off to a good start there.

Personal Solutions continues to make good progress with the integration of TrustedID, while continuing to execute at a high level on the strategic initiatives.

TrustedID has been successful in opening up new growth opportunities for PSOL in the indirect market, and providing us with opportunities to redirect our resources to better address the changing competitive landscape.

In fact, I think as we look forward in the next one, two, three, four years, that indirect market will be, in fact, the significant growth driver within PSOL.

PSOL, on the core business -- they continue to tweak their business model to address the inroads being made by free scores and free services.

Marketing expenditures in that core business have been reduced a bit, which is resulting in, over time, higher profit and slightly lower growth that we talked to you about last quarter.

But combined, a great combination with indirect and direct.

Finally, North America commercial solutions began integration of Forseva, whose decisioning platform will enable us to deliver high-value decisioning solutions to small business information market.

High single-digit growth in transaction revenues for the quarter were largely offset by a decline in their project-oriented revenue.

As you know, the project revenue can be lumpy, but the good news is: We're seeing the transaction revenue growing, which is a good sign.

Couple quick highlights for the Company now: As you all know, successfully executing on all of our enterprise-wide initiatives is a critical imperative for us.

The management discipline that underpin our ability to execute at a high level are ingrained in almost everything we do.

A couple of examples: As you know, seven years ago we launched NPI, a new product innovation program.

We've had great success over the seven years.

In fact, 2013 represented our largest revenue contribution from products over the previous three years.

At this junction, we're seven years into it, we need to keep it fresh.

We have launched a new program called NPI 2.0 -- it's just a way to reinvigorate NPI innovation across the Enterprise till we get another four or five years of great run rate from NPI.

We launched that earlier this year; it's off to a great start.

Link continues to be an important part of our DNA.

It's delivering significant benefits internally, which we talked to you about, but also externally, with our customers who engaged us to help them operate more efficiently and more effective.

Another way to differentiate ourselves from the competition.

As we entered 2014, I expected the first quarter to be the most challenging quarter we'd face, due to the fact that we had mortgage headwinds, you have a sluggish economy, had some weather, you had FX, and it was a difficult environment, but in that environment this team put up a very, very solid performance.

And as I look to the balance of the year, we're starting to see signs of strengthening economies around the globe in which we operate.

We're seeing that the mortgage headwinds will start to abate towards the end of this quarter, and improve a little bit in the third quarter, and be a [wind at our back] in the fourth quarter.

We'll continue to execute at a very high level on our innovation.

The things that we're doing around vertical focus is really making a difference.

And I can tell you: I'm seeing more share gains and wins in the marketplace in these key verticals with our Decision 360 platform than I have seen since we launched Decision 360 a number of years ago.

So, I believe right now, what we're seeing is the convergence of all of these good things that will position us very well for the balance of 2014 and into 2015.

So, with that, Lee?

Thanks, Rick, and good morning, everyone.

This morning, I'll be referring to the financial results from continuing operations, generally presented on a GAAP basis.

Our first-quarter performance was solid in the face of the challenging mortgage headwinds, which we anticipated.

As we indicated during our fourth-quarter release, those headwinds will continue into the second quarter, then moderate substantially in the second half.

Our full-year outlook has not changed.

Let me turn to the quarterly results.

Compared to the same quarter in 2013, for the first quarter of 2014, consolidated revenue of $585 million was up 3% on a reported basis, and up 5% on a constant-currency basis when compared to the first quarter of 2013.

Operating margin was 26%, down slightly from 26.3% in the first quarter of 2013.

Diluted earnings per share attributable to Equifax were $0.67 per share.

Excluding acquisition-related amortization, adjusted EPS was $0.89, up from $0.87 in the first quarter of 2013.

Moving to the individual business units, our US consumer information solutions revenue was $244 million, essentially flat when compared to the first quarter of 2013.

Our core non-mortgage market organic growth, including strategic initiatives, contributed approximately 6% to growth, although the decline in mortgage market volumes subtracted 6% from growth.

Online consumer information solutions revenue was $179 million, up 2%.

Core credit decisioning transaction volume was up 9%, while average revenue per transaction declined 8%.

The decline in revenue per transaction resulted from fewer mortgage-related transactions, which are typically at higher-than-average revenue per transaction, and from expansion with select large financial institutions and telcos, which have lower-than-average pricing due to their size.

Mortgage solutions revenue of $24 million was down 18% compared to the first quarter of 2013.

This compares very favorably to the Mortgage Bankers Application Index, which was down 54% in the first quarter.

Consumer financial marketing services revenue was $41 million, up 3% when compared to the year-ago quarter.

And the operating margin for US consumer information solutions was 38.9%, up from 37.5% in the first quarter of 2013.

Our international business units revenue was $144 million, up 16% on a reported basis, and up 24% on a local-currency basis.

The acquisitions we completed in the fourth quarter and first quarter contributed approximately 15 percentage points of the local-currency growth.

Strong organic growth was aided by above-average growth in small and medium enterprises, government, insurance and utilities.

By region, Europe's revenue was $66 million, up 48% in US dollars, and up 39% in local currency, driven by the acquisition of TDX and upper-single-digit organic growth in our core business.

Latin America's revenue was $47 million, flat in US dollars, but up 23% in local currency, driven about equally by organic growth in technology and analytical services, marketing services, and by the acquisitions in Paraguay and Mexico.

Canada consumer information revenue was $31 million, down 4% in US dollars, but up 5% in local currency, driven primarily by solid growth in information solutions, and technology and analytical services.

International's operating margin was 20.4%, compared to 28.1% in 2013.

Approximately half of the decline resulted from increased acquisition-related amortization expense of $5.8 million, related to the recent acquisitions.

The remaining decline resulted from seasonality in our newly acquired TDX business, and inflation-driven pressures on margin in Argentina.

We expect to exit the year with operating margin over 25%.

Workforce solutions revenue was $120 million for the quarter, down 3% when compared to the first quarter in 2013.

Verification services, with revenue of $64 million, was down 7% when compared to the same quarter in 2013.

Strong growth in government and pre-employment partially offset a 31% decline in mortgage-related revenues.

Revenue in our non-mortgage customer segments was up 16%.

Employer services revenue was $56 million, up 1% compared to last year.

The workforce solutions overall operating margin was 32.3%, compared to 30.3% in the first quarter of 2013, driven primarily by the benefit of reduced acquisition amortization, offset partially by the negative effect of lower revenue against a primarily fixed cost expense base.

North America personal solutions revenue was $54 million, up 6%.

Growth was driven primarily by the acquisition of TrustedID.

Solid mid-single-digit growth in US subscription revenues, and strong growth in Canada, were largely offset by declining revenue in breach and transaction products.

Operating margin for personal solutions was 28.2%, compared to 28.4% in the first quarter a year ago.

North America commercial solutions revenue was $23 million, flat on a reported basis, and up 2% on a local-currency basis, driven by growth in transaction revenue, partially offset by weakness in project-oriented revenues.

The operating margin was 19.4%, compared to 21.3% in the year-ago quarter.

Now let me turn it back to Rick.

Thanks, Lee.

Before we go to Q&A, I thought I'd just give you a couple thoughts and maybe frame up how we think about the remainder of 2014, and how we think about early view of 2015.

One, our core organic non-mortgage market growth rate of 6% to 8% that we've talked to you about for a number of years remains solid, and we'll continue to make great progress on all of our initiatives to ensure we deliver in that range, as we did in the first quarter.

Secondly, the integration of the acquisitions we've talked to you about are on track, and I'm more optimistic about the potential for TDX and Infinix to [deliver] different markets than I was at the time of the acquisition, and these acquisitions are expected to move to be accretive towards the back end of this year.

Three, as we've talked about, we are largely through the mortgage headwinds.

That will start to abate as we exit the second quarter, and continue to abate in the third quarter, and improve in the fourth quarter, and become wind at our back in 2015.

At this point, the foreign exchange headwinds we've talked to you about do not appear to be getting any worse; we've seen stability there.

When you put that all together, it says that, at this juncture, versus the fourth-quarter earnings call we had with you, Lee and I are even more confident in the outlook for the balance of this year and 2015 than we were at that time.

We still have to execute, obviously, as a Company.

As a result, we're going to reconfirm our full-year guidance we gave you in the last call.

We expect core organic non-mortgage market to grow in the range of 6% to 8%; acquisitions will add to our growth, while FX and mortgage will continue to be headwinds, again, through the second quarter into early third quarter -- very much as we expected, which is encouraging.

You should expect the total revenue for the total year to be between $2.425 billion and $2.475 billion; and our adjusted EPS consistent with what we told you last call, between $3.75 a share and $3.89 a share.

In the second quarter, we expect reported revenue between $606 million and $619 million; and adjusted EPS between $0.92 and $0.95.

So, very much in line with what we've expected from the end of the year.

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

(Operator Instructions)

Dan Perlin, RBC Capital Markets.

Rick, there's a lot of things you're throwing out in terms of initiatives that are taking place, and I just wanted to parse it a little bit when we think about this conviction going into the second half, and I guess what I'm trying to figure out is how much of the benefit really needs to be cyclical, and then the second part is versus what I would consider to be contractual obligations or what you're seeing spool up in all of your new products.

I'm just trying to split those two a bit.

It's tough to quantify the exact breakup but let me give you some color around that, Dan.

In our vertical markets, the things we're doing and have been doing now for a couple of years, focusing on verticals like autos, for example, insurance, Telco, are very more fluid than we anticipated just a few months ago, a few quarters ago.

That's number one.

Number two, like we mentioned, the acquisitions that we have, which are great strategically, and they become accretive at the back end of year.

That helps us.

And two the mortgage market is, as I said before, is abating almost as expected.

So it really comes down to continuing to do the things that the group has been doing for a number of years now, which is focusing on customers' needs, bundling price together in a unique way to solve these problems, and executing on a high level.

That combined with a little bit of market help, I think the economies will start to improve; we're seeing it in some of our data right now, in many parts of the world, is that the economy is improving; that helps us as well.

And then on the home equity lending side, that sounds like something that's new and could be meaningful.

When we think about that, how fast are you seeing that pace of play now, and is that something that also gives you some confidence as you think about second half?

And I want to be clear where that falls in the P&L, is that in verification services or is that up in somewhere else?

It's early stages, and I'm very encouraged.

We saw some nice volume at the end of the first quarter and we expect that to continue to the second quarter.

I think you'll see that home equity is right at the historical numbers in home equity loans, in the marketplace you'll see us returning closer to more normal levels versus these depressed levels we've had four or five years.

As far as where it shows up, it predominately shows up in our EWS business, verification of employment and income.

And then just a last one, congratulations on renewing the CMS deal.

But now that we've got some framework for numbers around that, should we come to expect that the contractual minimums is something that is just a jumping-off point and you guys should earn a lot more of that revenue possibly into 2014?

Yes, I sure hope so, Dan.

Thank you for the congratulations on the renewal, Dan, [that's just going to help us out] with CMS the last 18 months is secure, has been resecured.

There's a lot of noise in the 7.1 million or 8 million people that have signed up, you should think about around the contractual minimums at this point.

And as far as ramp-up I expect that in 2015, not 2014.

Paul Ginocchio, Deutsche Bank

I think when you talked about that IHS JV, that you said it was your first product, can you just elaborate on that, is there potentially more products in the pipeline with them?

Yes, it's pretty cool.

Rudy and his team have been working with Polk for a standalone company for a number of years now.

And the good news is, post-IHS acquisition of Polk doors are continuing to remain open, they see us as a unique provider of solutions for the automotive vertical; they know this is a unique focus for us.

So we've already had a couple, I mentioned one on the call, which is the lost sales analysis, which is really -- it's helpful, helps the underwriters of risk understand why they lost the risk, how to place the risk, where the ultimate buyer ends up going and why, and how they might reposition the next offering better to reduce churn or lost sales.

That's one of many products that we're currently working with IHS on, and again, I think that's an example, maybe this goes back to Dan's question of what's different, is when we restructure a company we want deep execution on different verticals like auto, you get intimate with that industry and understand their needs and challenges, so our ability to bundle our new products is so important now and so much more effective than it would have been in the past, and that sales analysis is one example.

If I could just ask a follow-up of Lee.

Lee, any way to give us what the total acquired revs were in the first quarter, and what the rough range would be for the second quarter?

I don't have the dollars but the growth was about 4% -- contributed 4% to growth so it would be roughly 4% of against last year's revenue from the low 20%s.

That will actually step up some in the second quarter because we'll have a full quarter on TDX, and also just the effect of acquisition accounting, when you first do an acquisition you lose some of the deferred revenue that the acquired company may have, and that tends to affect the first periods the most and then diminish over time.

So you'll see a somewhat bigger effect on growth in the second quarter.

If it was about 4% in Q1, the next quarter growth contribution is probably more like 5%.

If I remember, Lee, the mortgage headwind cost us about 6 points of growth in the first quarter, is that right?

Yes, and probably something roughly similar in the second quarter.

It really doesn't start -- and then it falls off in the third and fourth quarter to much smaller impacts.

Georgios Mihalos, Credit Suisse.

Congrats on a solid quarter.

I just wanted to begin on the international side a little bit.

Canada seemed to really accelerate from the fourth quarter, I just wonder what's driving that.

And then also, it seems to me that Europe constant currency slowed a little bit.

Is there anything going on there?

Are there any sort of variations that will play out throughout the course of the year?

There is nothing unusual on either side that is either driving optimism or concern.

We've got some seasonality in both areas.

As I look at the long-term forecast for both Europe, excluding Russia, but Europe as we report it, and Canada, solid performance, outperforming the marketplace growing with multiples of GDP.

I see it continuing.

But I don't see anything really unusual either on the upside or for the downside in either geography.

Georgios, I would add two things.

One, on Canada we have a continued good success with our technology and analytical services offerings.

We also saw a little bit stronger growth in just our traditional online credit reporting in the first quarter, and I don't know that there's any predictability to that.

It will strengthen or weaken a little bit from time to time; I think Canada continues to be in a low- to mid-single-digit kind of core organic growth trend.

On Europe, we'd been indicating last year a tentative run in the very high single-digits on organic growth, but looking at a very relatively stagnant UK economy and a weak Spain economy reflected just great performance and growth on our part, but we've been flagging.

That could moderate a little bit and I think that's what we saw, but it continues to perform well across a number of product and customer segments.

Yes, I think the organic growth in Europe is about 8% --

7%.

-- 7% for the quarter so you think about those two economies; that continues to be impressive.

And just one more question, Lee.

The general corporate expenses were down considerably year on year.

What's driving that and how should we think about that line item going forward as it compares to your revenue growth?

The corporate line, in addition to having certain of the corporate staff expenses which tend to be pretty stable, includes a number of activities that are project-related, discretionary, certain investments that we make that are corporate-wide, and that line can fluctuate some quarter-to-quarter.

It was down year over year in the first quarter which would not be the normal trend.

I would say that you should expect for the year that the corporate line will be up but by less than revenue.

But you'll see fluctuations quarter-to-quarter as we have seen sometimes in the past.

Shlomo Rosenbaum, Stifel

Rick, I want to focus a little bit more on the super scores.

It seems to me that if I look over the last seven years or so at Equifax, it went through a period of focusing more on buying unique assets, and then a period that you're still in in terms of integrating the different assets.

It seems like the endgame, or at least part of the endgame, should be coming up a lot more of these super scores in areas where your competitors can't do that.

If you talk about which verticals you feel like you have that in, and where you think you have a lot of potential, and how important that is for the strategic revenue growth of the business overall.

As I think about the tenets for long-term growth for the company, kind of new areas for us, we talked in the past about fraud and ID prevention as being one and talked about analytics and solutions being another.

So clearly, we are investing at a very heavy rate, we brought a great guy in, who's steeped in his understanding of and developing of analytical products, he's done analytics for Hewlett-Packard, he's been here for about a year now.

So, one, having the focus and the talent around analytics and two, having the unique data assets to build those new analytics and insights, I think we're put in a good position.

So it's clearly a place where we have been and will continue to make a bet on investments in because I think we're in a unique position because of our assets.

As far as verticals, it's going to start off with the verticals where we think we're uniquely positioned with our unique data assets.

Automotive is one, mortgage is one, Telco is one, insurance is one.

To start with, those are the key areas where we start and maybe also in [EFIs], for the next.

How far along do you feel you are in terms of coming out with some of these super scores?

Do you feel like there's a lot of open terrain in front of you?

I do, for one primary reason: we had to build some technical capabilities that enable us to manipulate the data in different ways than we could before, to do it real-time and do it cost-efficiently.

Those capabilities have started late last year, early this year, they'll continue through the third quarter and I expect it to be in a position where we can run a much faster rate and more economical rate in fourth-quarter this year.

It's early days but very encouraging days.

Just jumping back to the ACA question, are you seeing these amount of sign-ups actually flowing through and hitting your numbers in terms of expanding revenue for you guys?

Yes.

Great question.

Let me explain one time how we do it, we have an analytical capability [that they will] company, and say give us all of your data and with that data we can analyze and tell if you're compliant with the Affordable Care Act.

So there's two revenue streams that are important to acknowledge.

One is we charge those hundred plus companies for that analytical solution.

Secondly, in many cases, those companies who are using our platform, our analytics, have not been Work Number contributors in the past, so we use this platform, analytics platform, to not only solve their problem, but in many cases add to the Work Number database which has exceeded our expectations so far, and so the monetization of that is once you get on the database people start hitting that database looking for verification of employment income and you know what those records -- cost record looks like there.

So there's two revenue streams.

The latter, the Work Number database, lags, obviously, you get to go the end, [cleanse,] and people start hitting it.

The project revenue is more immediate.

what about the stuff that's coming from the government?

I'm trying to understand, there's a big number that the government put out, and if you do some machinations around that, I'm try to figure out, do you -- based on the levels of sign-ups and where you're seeing the revenue flow (multiple speakers) potential to hit the quarterly $50 million or $60 million per year, potentially, that that contract would imply?

Again, the government's proclaimed 7 million to 8 million people signed up, there's so much noise in those numbers [when you cycle through it], I think you're going to find that many of those people are retired people so there's no HIPAA Work Number record at this juncture.

So we're not seeing -- I think someone asked the question earlier -- if you think about 2014 think more in the framework of the minimums guaranteed by CNS, and my hope is that as this thing ramps up into 2015 and beyond, you see the revenues move well beyond the minimums, but it's too early to proclaim that now.

So as I said in the past calls, as we run more, get smarter, see what's occurring in the marketplace you guys will be the first to know.

Can I squeeze one last housekeeping one for Lee?

Hey Lee, you purchased 0.4 million shares, the share count still went up a little bit.

Is there a timing difference, is it a stock price or issuance of equity timing, how should we think of that in terms of repurchases?

I hadn't looked at it quite that closely but we probably need to buy between 1 million and 1.25 million shares over the course of a year to offset the effect of equity compensation.

The average shares, that could be timing, I don't have right in front of me the ending shares.

My guess is the ending shares may have come down just slightly but the average shares would be a function of timing.

We would've been buying relatively late in the quarter because of the timing of our year-end earnings release.

So it's probably a function of timing and the effect on weighted average shares.

David Togut, Evercore.

Good morning, this is Rena Kumar for David Togut.

You discussed a lot of your new products in your opening remarks.

Could you just call out which of your new products made the biggest contribution to revenue in the quarter?

I don't have that on top of my head but again, you've got to put it in perspective; we launch anywhere from 50 to 75 new products every year and have been so for about seven years.

So it's truly broad-based.

We don't typically look at or get what we call home runs with products.

In total it ends up being a significant number; our goal, as you know, is a vitality mix of 10% of our revenue coming from price [going] just three years ago.

So it tends to be a bunch of singles and doubles and it's truly in almost every geography we have around the world.

I can give a couple of examples of some of the bigger categories.

The products that we have developed from the Telco positive database are relatively large.

The products that have developed in the mortgage space, taking advantages of our additional sources of data, the -- bringing some of our technology decisioning platforms much more broadly across our international space and there we have high-end platforms and low-end platforms depending on the size and sophistication of our customers.

Some of the things we've done with identity authentication are another one of the larger categories that we've brought out.

Those are couple of the product families that have been the most significant over the last year.

And just -- that's a great point, Lee.

Those categories would be largely consistent, not just for the first quarter, but you said the last year or two that's been an area of focus.

Great, and if you can just discuss your current acquisition pipeline.

Yes, at this juncture we are really focused on integrating TDX, Infinix, [Paraguay], and taking, strategically, the Infinix and TDX platforms as I mentioned earlier, two different geographies, I think that should keep the business occupied for quite some time.

M&A, we continue to look at M&A, we're focused more on strategic tuck-ins than we are on large deals.

So it will always be an important part of our strategy.

There's nothing that's imminent to talk about at this juncture.

Nick Nikitas, Robert Baird.

You mentioned continued expectations for mortgage improvement.

I think last quarter you guys quantified your MBA expectations.

Could you put a number on that for 2Q if possible?

Allow me to speak from memory.

Maybe you have that later, Jeff.

We talked about -- the MBA was -- talked about being done part-way in the first half of the year, might have been the second half of the year, total year down about 30% for the year.

Second quarter will improve over first quarter, if it was down 50% it may be down 20% to 30% for the second quarter.

Does that sound about right?

My word of caution on the MBA indices is that we have had difficulty over time tightly correlating our revenue growth, but even some of the flow of closed mortgage loans with the MBA indices.

There's a lot of different sources for data, you can look at different economists and they forecast different things.

So there's a lot of attention on the MBA indices; it's as good an index as others but the correlation is a little loose, so be careful about using that as our benchmark for our revenue.

Does someone know what the published MBA is?

For Q2 forecast?

(Multiple speakers)

The trend that everyone is expecting the mortgage in general, beyond MBA, is the mortgage market in the second quarter will be modestly better than the first quarter.

You mentioned the NPI 2.0 introductions.

Could you just talk more about what you're doing differently there, and then just, in general, the pipeline for that product line?

Yes, Nick, it's more of a process that a product line.

NPI was launched seven years ago and after -- we didn't do anything for seven years.

It runs the risk of becoming somewhat stale, entitlement sets in.

So it's just our way of re-energizing and redefining the parameters around NPI, and think about NPI, and you get new ideas in from clients and working with VC firms and Silicon Valley firms, just to continue to make sure we've got great ideas coming through the funnel.

So it's our way of re-energizing it and we started it late last year and it's off to a great start.

My hope is that this keeps the energy around NPI going for another four or five years.

Just one last one from me.

You talked about the vitality index in the past three-year contribution mix.

I think previously, you said that international sees a large benefit from that.

Any other segments where you're running above that 10% run rate, is it pretty spread out across all of them?

It will ebb and flow because sometimes you'll have more products in one particular venue that will run off in a particular year so it was counted the last four years; as you get into the fourth year we are counted as part of the core then, not the vitality.

So every business unit will have its ups and downs.

If they have a big product launch in any one given year.

Manav Patnaik, Barclays.

The first round of new products and the partnerships you've talked about.

So firstly, you mentioned auto, obviously, is a key vertical, you're partnering with IHS Polk.

I was just wondering, over the longer term, what your appetite for acquisitions in that area is with respect to building up that capability, and just around partnerships, you mentioned IHS, I was just wondering if you guys had an announcement teaming up with CoreLogic as well.

I was wondering how significant or incremental could that be.

Well, as acquisitions we'll obviously look, but at this juncture, as outlook specifically auto to answer your question.

Key focus there for us, I think we've assembled unique assets that we need to succeed there.

I think we've assembled the right partners, and a number of key partners who have capabilities and pipes into the automotive industry that they see the value we bring and we see the value they bring.

We tend to look towards commercial agreements versus hard-core JVs at this juncture.

I don't see a need to do anything on the M&A front but that obviously may change; I think we can do as we have been doing, and do it quite successfully.

As far as CoreLogic I'm not going to break that out.

Partnerships are important to us as we get into verticals and vertical focus, find people who, like CoreLogic, were very good in a particular spacing and want to bring value and do bring value is a win-win situation.

So we're not going to quantify the size of that.

Fair enough.

Not quantifying it, but would that be an added level in terms of offsetting the market growth more than what you already are doing?

Yes, I think so.

I think if you think of any time we can find a way to bring value to the mortgage market that we couldn't bring in the past helps offset the headwind we feel.

And then Lee, just on the margin side, I was just wondering if you could help us sort a couple of things out.

So on the corporate expense line you said the total year number should be higher than the 2013 number and you said less than growth, I'm guessing up 10% or so.

I wanted to see if you could give us a little more specificity there.

And then on the international side I think you said exit the year 25%.

I just wanted to clarify if that meant the full-year number should be 25% or just the fourth quarter to be the 25%.

On corporate expense I would expect it to grow, probably, in the range of 4% or 5%, although again, that can change as we make decisions through the year on various projects and initiatives we want to undertake.

But my current expectation would be, might be looking at 4% or 5% growth for the year.

International, that 25% is probably a reasonable number for the second half but that's not a full-year number, that's a second-half number.

Particularly as we get TDX integrated recognizing the seasonality of its business as well as we get through the period where we're running off are not able to recognize their past deferred revenue, you'll see a natural lift in what TDX is contributing.

And for the second quarter international is similar the first quarter?

Probably a little bit better but still below where we would expect it to be over time.

And just one last one, I don't know if I remember this, but in terms of the CMS minimums that you talked about, have you guys disclosed that before?

I think we have.

Jeff?

We talked about numbers from $8 million to $10 million.

With that I'd like to thank everybody for their interest and support of Equifax, and with that, operator will conclude the call.

That concludes today's question and answer session.

Mr. Jeff Dodge, I'd like to turn the conference back to for any additional or closing remarks.

No, there are none.

Thank you.

That concludes today's conference.

Thank you for your participation.