UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                      to                                      .

Commission File Number: 001-06605

EQUIFAX INC.

(Exact name of registrant as specified in its charter) 

Georgia	58-0401110
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

1550 Peachtree Street	N.W.	Atlanta	Georgia	30309
(Address of principal executive offices)				(Zip Code)

404-885-8000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, $1.25 par value per share	EFX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    ☒    No    ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes    ☒    No    ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	Accelerated filer	Non-accelerated filer	Smaller reporting company	Emerging growth company
☒	☐	☐	☐	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    ☐ No   ☒

On October 9, 2020, there were 121,642,955 shares of the registrant’s common stock outstanding.

EQUIFAX INC.

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED SEPTEMBER 30, 2020

INDEX

		Page
PART I.	Financial Information	4
Item 1.	Financial Statements (Unaudited)	4
	Consolidated Statements of Income—Three Months Ended September 30, 2020 and 2019	4
	Consolidated Statements of Income (Loss)—Nine Months Ended September 30, 2020 and 2019	5
	Consolidated Statements of Comprehensive Income (Loss)—Three and Nine Months Ended September 30, 2020 and 2019	6
	Consolidated Balance Sheets—September 30, 2020 and December 31, 2019	7
	Consolidated Statements of Cash Flows—Nine Months Ended September 30, 2020 and 2019	8
	Consolidated Statements of Changes in Equity and Other Comprehensive Loss—Three Months Ended September 30, 2020 and 2019	9
	Consolidated Statements of Changes in Equity and Other Comprehensive (Loss) Income—Nine Months Ended September 30, 2020 and 2019	10
	Notes to Consolidated Financial Statements (Unaudited)	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43
PART II.	Other Information	44
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 6.	Exhibits	48
Signatures		49

2

FORWARD-LOOKING STATEMENTS

This report contains information that may constitute “forward-looking statements.” Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “may” and similar expressions identify forward-looking statements, which generally are not historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future, including statements relating to future operating results, the 2017 cybersecurity incident, improvements in our information technology and data security infrastructure, including as part of our EFX 2020 cloud technology, data and security transformation, our strategy, our ability to mitigate or manage disruptions posed by COVID-19, the impact of COVID-19 and changes in U.S. and worldwide economic conditions that materially impact consumer spending, consumer debt and employment and the demand for Equifax's products and services, our culture, our ability to innovate, the market acceptance of new products and services and similar statements about our business plans are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part II, “Item 1A. Risk Factors,” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2019, as well as subsequent reports filed with the Securities and Exchange Commission. As a result of such risks and uncertainties, we urge you not to place undue reliance on any forward-looking statements. Forward-looking statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

3

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended  September 30,
	2020		2019
(In millions, except per share amounts)
Operating revenue	$	1,068.3	$	875.7
Operating expenses:
Cost of services (exclusive of depreciation and amortization below)	433.2		374.5
Selling, general and administrative expenses	330.0		295.5
Depreciation and amortization	100.7		84.1
Total operating expenses	863.9		754.1
Operating income	204.4		121.6
Interest expense	(37.4)		(28.0)
Other income, net	133.4		2.9
Consolidated income before income taxes	300.4		96.5
Provision for income taxes	(75.4)		(14.0)
Consolidated net income	225.0		82.5
Less: Net income attributable to noncontrolling interests including redeemable noncontrolling interests	(0.8)		(1.4)
Net income attributable to Equifax	$	224.2	$	81.1
Basic earnings per common share:
Net income attributable to Equifax	$	1.84	$	0.67
Weighted-average shares used in computing basic earnings per share	121.5		121.0
Diluted earnings per common share:
Net income attributable to Equifax	$	1.82	$	0.66
Weighted-average shares used in computing diluted earnings per share	123.0		122.3
Dividends per common share	$	0.39	$	0.39

See Notes to Consolidated Financial Statements.

4

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)

	Nine Months Ended September 30,
	2020		2019
(In millions, except per share amounts)
Operating revenue	$	3,009.1	$	2,601.8
Operating expenses:
Cost of services (exclusive of depreciation and amortization below)	1,256.5		1,138.9
Selling, general and administrative expenses	955.9		1,601.2
Depreciation and amortization	289.5		244.2
Total operating expenses	2,501.9		2,984.3
Operating income (loss)	507.2		(382.5)
Interest expense	(104.7)		(82.3)
Other income, net	171.1		7.9
Consolidated income (loss) before income taxes	573.6		(456.9)
(Provision) benefit for income taxes	(138.0)		53.3
Consolidated net income (loss)	435.6		(403.6)
Less: Net income attributable to noncontrolling interests including redeemable noncontrolling interests	(2.9)		(4.4)
Net income (loss) attributable to Equifax	$	432.7	$	(408.0)
Basic earnings per common share:
Net income (loss) attributable to Equifax	$	3.56	$	(3.38)
Weighted-average shares used in computing basic earnings per share	121.4		120.8
Diluted earnings per common share:
Net income (loss) attributable to Equifax	$	3.53	$	(3.35)
Weighted-average shares used in computing diluted earnings per share	122.7		122.0
Dividends per common share	$	1.17	$	1.17

See Notes to Consolidated Financial Statements.

5

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended September 30,
	2020						2019
	Equifax Shareholders		Noncontrolling Interests		Total		Equifax Shareholders		Noncontrolling Interests		Total
	(In millions)
Net income	$	224.2	$	0.8	$	225.0	$	81.1	$	1.4	$	82.5
Other comprehensive income (loss):
Foreign currency translation adjustment	49.4		0.2		49.6		(80.5)		(1.4)		(81.9)
Change in unrecognized prior service cost and actuarial losses related to our pension and other postretirement benefit plans, net	3.8		—		3.8		3.0		—		3.0
Comprehensive income	$	277.4	$	1.0	$	278.4	$	3.6	$	—	$	3.6

	Nine Months Ended September 30,
	2020						2019
	Equifax Shareholders		Noncontrolling Interests		Total		Equifax Shareholders		Noncontrolling Interests		Total
	(In millions)
Net income (loss)	$	432.7	$	2.9	$	435.6	$	(408.0)	$	4.4	$	(403.6)
Other comprehensive income (loss):
Foreign currency translation adjustment	(8.2)		(1.5)		(9.7)		(100.3)		(1.5)		(101.8)
Change in unrecognized prior service cost and actuarial losses related to our pension and other postretirement benefit plans, net	11.3		—		11.3		9.0		—		9.0
Change in cumulative loss from cash flow hedging transactions, net	—		—		—		0.1		—		0.1
Comprehensive income (loss)	$	435.8	$	1.4	$	437.2	$	(499.2)	$	2.9	$	(496.3)

See Notes to Consolidated Financial Statements.

6

EQUIFAX INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30, 2020		December 31, 2019
(In millions, except par values)
ASSETS
Current assets:
Cash and cash equivalents	$	1,535.6	$	401.3
Trade accounts receivable, net of allowance for doubtful accounts of $15.8 and $11.2 at September 30, 2020 and December 31, 2019, respectively	605.9		532.1
Prepaid expenses	123.3		88.1
Other current assets	46.8		187.9
Total current assets	2,311.6		1,209.4
Property and equipment:
Capitalized internal-use software and system costs	1,254.3		979.4
Data processing equipment and furniture	329.5		325.1
Land, buildings and improvements	235.9		236.3
Total property and equipment	1,819.7		1,540.8
Less accumulated depreciation and amortization	(749.1)		(593.2)
Total property and equipment, net	1,070.6		947.6
Goodwill	4,366.0		4,308.3
Indefinite-lived intangible assets	94.8		94.9
Purchased intangible assets, net	1,001.4		1,044.6
Other assets, net	405.4		304.2
Total assets	$	9,249.8	$	7,909.0
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt and current maturities of long-term debt	$	1,102.1	$	3.1
Accounts payable	159.5		148.3
Accrued expenses	186.4		163.5
Accrued salaries and bonuses	207.1		156.1
Deferred revenue	103.5		104.0
Other current liabilities	632.4		784.1
Total current liabilities	2,391.0		1,359.1
Long-term debt	3,275.3		3,379.5
Deferred income tax liabilities, net	339.9		248.0
Long-term pension and other postretirement benefit liabilities	106.1		118.9
Other long-term liabilities	170.7		180.6
Total liabilities	6,283.0		5,286.1
Commitments and Contingencies (see Note 5)
Equifax shareholders' equity:
Preferred stock, $0.01 par value: Authorized shares - 10.0; Issued shares - none	—		—
Common stock, $1.25 par value: Authorized shares - 300.0; Issued shares - 189.3 at September 30, 2020 and December 31, 2019; Outstanding shares - 121.6 and 121.2 at September 30, 2020 and December 31, 2019, respectively	236.6		236.6
Paid-in capital	1,454.1		1,405.1
Retained earnings	4,423.1		4,131.8
Accumulated other comprehensive loss	(628.5)		(631.6)
Treasury stock, at cost, 67.1 shares and 67.5 shares at September 30, 2020 and December 31, 2019, respectively	(2,550.4)		(2,557.4)
Stock held by employee benefit trusts, at cost, 0.6 shares at September 30, 2020 and December 31, 2019	(5.9)		(5.9)
Total Equifax shareholders’ equity	2,929.0		2,578.6
Noncontrolling interests including redeemable noncontrolling interests	37.8		44.3
Total equity	2,966.8		2,622.9
Total liabilities and equity	$	9,249.8	$	7,909.0

 See Notes to Consolidated Financial Statements.

7

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2020		2019
	(In millions)
Operating activities:
Consolidated net income (loss)	$	435.6	$	(403.6)
Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities:
Depreciation and amortization	295.2		248.8
Stock-based compensation expense	43.9		40.6
Deferred income taxes	78.0		(81.7)
Gain on fair market value adjustment of equity investments	(162.8)		—
Changes in assets and liabilities, excluding effects of acquisitions:
Accounts receivable, net	(76.1)		(49.9)
Other assets, current and long-term	29.6		32.6
Current and long term liabilities, excluding debt	5.6		296.3
Cash provided by operating activities	649.0		83.1
Investing activities:
Capital expenditures	(309.5)		(305.7)
Acquisitions, net of cash acquired	(61.4)		(234.8)
Investment in unconsolidated affiliates, net	(10.0)		(25.0)
Cash used in investing activities	(380.9)		(565.5)
Financing activities:
Net short-term borrowings	0.3		367.0
Payments on long-term debt	(125.0)		(50.0)
Borrowings on long-term debt	1,123.3		250.0
Dividends paid to Equifax shareholders	(142.1)		(141.4)
Dividends paid to noncontrolling interests	(2.6)		(4.8)
Proceeds from exercise of stock options and employee stock purchase plan	29.9		15.3
Payment of taxes related to settlement of equity awards	—		(9.7)
Purchase of redeemable noncontrolling interests	(9.0)		—
Debt issuance costs	(9.8)		—
Other	0.3		—
Cash provided by financing activities	865.3		426.4
Effect of foreign currency exchange rates on cash and cash equivalents	0.9		(0.1)
Increase (decrease) in cash and cash equivalents	1,134.3		(56.1)
Cash and cash equivalents, beginning of period	401.3		223.6
Cash and cash equivalents, end of period	$	1,535.6	$	167.5

See Notes to Consolidated Financial Statements.

8

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND OTHER COMPREHENSIVE LOSS

(Unaudited)

For the Three Months Ended September 30, 2020

	Equifax Shareholders
								Accumulated Other Comprehensive Loss				Stock Held By Employee Benefits Trusts
	Common Stock
	Shares Outstanding	Amount		Paid-In Capital		Retained Earnings				Treasury Stock				Noncontrolling Interests		Total Equity
	(In millions, except per share amounts)
Balance, June 30, 2020	121.5	$	236.6	$	1,447.8	$	4,248.0	$	(681.7)	$	(2,550.7)	$	(5.9)	$	40.2	$	2,734.3
Net income	—	—		—		224.2		—		—		—		0.8		225.0
Other comprehensive income	—	—		—		—		53.2		—		—		0.2		53.4
Shares issued under stock and benefit plans, net of minimum tax withholdings	0.1	—		(1.0)		—		—		0.3		—		—		(0.7)
Cash dividends ($0.39 per share)	—	—		—		(47.6)		—		—		—		—		(47.6)
Dividends paid to employee benefits trusts	—	—		0.2		—		—		—		—		—		0.2
Stock-based compensation expense	—	—		12.2		—		—		—		—		—		12.2
Redeemable noncontrolling interest adjustment	—	—		—		(1.5)		—		—		—		1.5		—
Dividends paid to noncontrolling interests	—	—		—		—		—		—		—		(1.0)		(1.0)
Purchases of noncontrolling interests	—	—		(5.1)		—		—		—		—		(3.9)		(9.0)
Balance, September 30, 2020	121.6	$	236.6	$	1,454.1	$	4,423.1	$	(628.5)	$	(2,550.4)	$	(5.9)	$	37.8	$	2,966.8

At September 30, 2020, $590.1 million was available for future purchases of common stock under our share repurchase authorization.

For the Three Months Ended September 30, 2019

	Equifax Shareholders
								Accumulated Other Comprehensive Loss				Stock Held By Employee Benefits Trusts
	Common Stock
	Shares Outstanding	Amount		Paid-In Capital		Retained Earnings				Treasury Stock				Noncontrolling Interests		Total Equity
	(In millions, except per share amounts)
Balance, June 30, 2019	120.9	$	236.6	$	1,381.5	$	4,135.5	$	(640.0)	$	(2,564.3)	$	(5.9)	$	44.5	$	2,587.9
Net income	—	—		—		81.1		—		—		—		1.4		82.5
Other comprehensive loss	—	—		—		—		(77.5)		—		—		(1.4)		(78.9)
Shares issued under stock and benefit plans, net of minimum tax withholdings	0.2	—		0.1		—		—		3.9		—		—		4.0
Cash dividends ($0.39 per share)	—	—		—		(47.4)		—		—		—		—		(47.4)
Dividends paid to employee benefits trusts	—	—		0.2		—		—		—		—		—		0.2
Stock-based compensation expense	—	—		10.8		—		—		—		—		—		10.8
Redeemable noncontrolling interest adjustment	—	—		—		1.2		—		—		—		(1.2)		—
Balance, September 30, 2019	121.1	$	236.6	$	1,392.6	$	4,170.4	$	(717.5)	$	(2,560.4)	$	(5.9)	$	43.3	$	2,559.1

9

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND OTHER COMPREHENSIVE LOSS

(Unaudited)

For the Nine Months Ended September 30, 2020

	Equifax Shareholders
								Accumulated Other Comprehensive Loss				Stock Held By Employee Benefits Trusts
	Common Stock
	Shares Outstanding	Amount		Paid-In Capital		Retained Earnings				Treasury Stock				Noncontrolling Interests		Total Equity
	(In millions, except per share amounts)
Balance, December 31, 2019	121.2	$	236.6	$	1,405.1	$	4,131.8	$	(631.6)	$	(2,557.4)	$	(5.9)	$	44.3	$	2,622.9
Net income	—	—		—		432.7		—		—		—		2.9		435.6
Other comprehensive income (loss)	—	—		—		—		3.1		—		—		(1.5)		1.6
Shares issued under stock and benefit plans, net of minimum tax withholdings	0.4	—		9.5		—		—		7.0		—		—		16.5
Cash dividends ($1.17 per share)	—	—		—		(142.8)		—		—		—		—		(142.8)
Dividends paid to employee benefits trusts	—	—		0.7		—		—		—		—		—		0.7
Stock-based compensation expense	—	—		43.9		—		—		—		—		—		43.9
Redeemable noncontrolling interest adjustment	—	—		—		1.8		—		—		—		(1.8)		—
Dividends paid to noncontrolling interests	—	—		—		—		—		—		—		(2.6)		(2.6)
Purchases of noncontrolling interests	—	—		(5.1)		—		—		—		—		(3.9)		(9.0)
Cumulative adjustment from change in accounting principle	—	—		—		(0.4)		—		—		—		—		(0.4)
Other	—	—		—		—		—		—		—		0.4		0.4
Balance, September 30, 2020	121.6	$	236.6	$	1,454.1	$	4,423.1	$	(628.5)	$	(2,550.4)	$	(5.9)	$	37.8