CHICAGO, Oct. 22, 2019 (GLOBE NEWSWIRE) -- TransUnion (NYSE: TRU) (the “Company”) today announced financial results for the quarter ended September 30, 2019.
Revenue:
- Total revenue was $689 million, an increase of 14 percent (15 percent on a constant currency basis, 14 percent on an organic constant currency basis) compared with the third quarter of 2018.
- Adjusted Revenue, which removes the impact of deferred revenue purchase accounting reductions and other adjustments to revenue for our recently acquired entities, was also $689 million, an increase of 11 percent (12 percent on a constant currency basis, 11 percent on an organic constant currency basis, 12 percent on an organic constant currency basis excluding last year’s incremental credit monitoring revenue due to a breach at a competitor) compared with the third quarter of 2018.
Earnings:
- Net income attributable to TransUnion was $92 million, compared with $46 million for the third quarter of 2018. Diluted earnings per share was $0.48, compared with $0.24 for the third quarter of 2018.
- Adjusted Net Income was $146 million, compared with $125 million for the third quarter of 2018. Adjusted Diluted Earnings per Share was $0.76, compared with $0.65 for the third quarter of 2018.
- Adjusted EBITDA was $281 million, an increase of 15 percent (16 percent on a constant currency basis, 15 percent on an organic constant currency basis) compared with the third quarter of 2018. Adjusted EBITDA margin was 40.7 percent, compared with 39.4 percent for the third quarter of 2018.
“TransUnion delivered another strong quarter with double-digit organic constant currency Adjusted Revenue, Adjusted EBITDA and Adjusted EPS growth in the quarter,” said Chris Cartwright, President and CEO. “The results reflect the high-performance culture of the TransUnion team as well as our array of advantaged data assets, capabilities and technology infrastructure. We continue to aggressively invest in all of these areas to maintain our leadership position in the industry.”
“Our strong performance has also afforded us the opportunity to prepay another $165 million of debt, bringing our total prepayments to $265 million for the year, and $325 million over the past twelve months. We were able to do this even as we invested in the business, participated in strategic M&A, and paid our quarterly dividends over this time.”
Third Quarter 2019 Segment Results
U.S. Markets
U.S. Markets revenue was $420 million, an increase of 12 percent (11 percent on an organic basis) compared with the third quarter of 2018.
- Financial Services revenue was $225 million, an increase of 13 percent (13 percent on an organic basis) compared with the third quarter of 2018.
- Emerging Verticals revenue, which includes Healthcare, Insurance and all other verticals, was $195 million, an increase of 11 percent (8 percent on an organic basis) compared with the third quarter of 2018.
Adjusted EBITDA was $181 million, an increase of 18 percent (18 percent on an organic basis) compared with the third quarter of 2018.
International
International revenue was $160 million, an increase of 24 percent (28 percent on a constant currency basis) compared with the third quarter of 2018. International Adjusted Revenue was also $160 million, an increase of 10 percent (14 percent on a constant currency basis) compared with the third quarter of 2018 Adjusted Revenue.
- Canada revenue was $27 million, an increase of 11 percent (12 percent on a constant currency basis) compared with the third quarter of 2018.
- Latin America revenue was $26 million, an increase of 8 percent (13 percent on a constant currency basis) compared with the third quarter of 2018.
- United Kingdom revenue was $48 million. Adjusted Revenue was also $48 million, an increase of 6 percent (12 percent on a constant currency basis) compared with the third quarter of 2018 Adjusted Revenue.
- Africa revenue was $16 million, an increase of 2 percent (7 percent on a constant currency basis) compared with the third quarter of 2018.
- India revenue was $27 million, an increase of 33 percent (34 percent on a constant currency basis) compared with the third quarter of 2018.
- Asia Pacific revenue was $16 million, an increase of 1 percent (also 1 percent on a constant currency basis) compared with the third quarter of 2018.
Adjusted EBITDA was $64 million, an increase of 12 percent (16 percent on a constant currency basis) compared with the third quarter of 2018.
Consumer Interactive
Consumer Interactive revenue was $128 million, an increase of 7 percent compared with the third quarter of 2018.
Adjusted EBITDA was $67 million, an increase of 10 percent compared with the third quarter of 2018.
July Fraud Incident
In early July 2019, we determined that TransUnion Limited, a Hong Kong entity that is included in our International segment and in which we hold a 56.25 percent interest, was the victim of criminal fraud (the “Fraud Incident”). The Fraud Incident involved employee impersonation and fraudulent requests targeting TransUnion Limited, which resulted in a series of fraudulently-induced unauthorized wire transfers totaling $17.8 million in early July 2019 that is included in other income and (expense), net, on our Consolidated Statements of Income. In addition, through September 30, 2019, we have incurred $1.8 million of administrative expenses investigating the Fraud Incident and enhancing our controls that is included in selling, general and administrative expenses, for a total of $19.7 million that is included in income before income taxes. The tax benefit of these expenses was $3.3 million, for a net after tax loss of $16.4 million, of which $7.1 million is attributable to the non-controlling interest and $9.3 million is attributable to TransUnion. There was no impact on Adjusted EBITDA or Adjusted Net Income as the net impact of the Fraud Incident was added back to these non-GAAP financial measures as presented in the tables below.
Liquidity and Capital Resources
Cash and cash equivalents were $236 million at September 30, 2019 and $187 million at December 31, 2018. Total debt, including the current portion of long-term debt, was $3,740 million at September 30, 2019 and $4,048 million at December 31, 2018.
For the nine months ended September 30, 2019 cash provided by continuing operations was $588 million compared with $410 million in 2018. The increase was due primarily to the increase in operating performance, partially offset by an increase in interest expense resulting from the increase in outstanding debt due to our 2018 acquisitions. Cash used in investing activities was $155 million compared with $1,927 million in 2018, due primarily to lower cash used for acquisitions and proceeds from the sale of the Callcredit discontinued operations, partially offset by an increase in capital expenditures. Capital expenditures were $132 million compared with $118 million in 2018. Cash used in financing activities was $373 million compared with a source of cash of $1,634 million in 2018. The change in cash from financing activities is due primarily to the loan proceeds borrowed in 2018 to fund our acquisitions, partially offset by $265 million of prepayments made on our outstanding debt in 2019, $38 million of cash used to pay employee withholding taxes on restricted stock that vested during the year that we have recorded as treasury stock, and one additional quarterly dividend payment made in 2019 compared with 2018.
2019 Full Year Outlook
For the full year of 2019, we are raising our Adjusted Revenue, Adjusted EBITDA and Adjusted Diluted Earnings per Share guidance as follows. Adjusted Revenue is expected to be between $2.644 billion and $2.649 billion, an increase of 13 percent compared with 2018. Adjusted EBITDA is expected to be between $1.048 billion and $1.052 billion, an increase of 14 to 15 percent. Adjusted Diluted Earnings per Share is expected to be between $2.74 and $2.76, an increase of 10 percent. Adjusted Diluted Earnings per Share guidance includes an approximate $0.04 per share headwind from unfavorable foreign exchange rates and an approximate $0.14 per share headwind from the full year impact of higher interest expenses related to the additional debt for acquisitions completed in June 2018 and higher LIBOR rates in 2019 compared with 2018.
The Adjusted Revenue guidance includes approximately 500 basis points of growth from acquisitions that closed in the prior year and current year. Adjusted Revenue and Adjusted EBITDA include approximately 100 basis points of headwind from foreign exchange rates. Our prior year results included approximately $20 million of incremental monitoring revenue due to a breach at a competitor which negatively impacts our organic constant currency Adjusted Revenue growth by approximately 100 basis points.
2019 Fourth Quarter Outlook
For the fourth quarter of 2019, Adjusted Revenue is expected to be between $667 million and $672 million, an increase of 7 to 8 percent compared with the fourth quarter of 2018. Adjusted EBITDA is expected to be between $264 million and $268 million, an increase of 6 to 8 percent. Adjusted Diluted Earnings per Share is expected to be between $0.69 and $0.71, an increase of 5 to 7 percent. Adjusted Diluted Earnings per Share includes an approximate $0.01 headwind in total from unfavorable foreign exchange rates.
The Adjusted Revenue guidance includes approximately 50 basis points of growth from acquisitions that closed in the current year. Adjusted Revenue and Adjusted EBITDA include approximately 100 basis points of headwind from foreign exchange rates. Our prior year results included approximately $5 million of incremental monitoring revenue due to a breach at a competitor, which negatively impacts our organic constant currency Adjusted Revenue growth by approximately 100 basis points.
Earnings Webcast Details
In conjunction with this release, TransUnion will host a conference call and webcast today at 8:00 a.m. Central Time to discuss the business results for the quarter and certain forward-looking information. This session may be accessed at www.transunion.com/tru. A replay of the call will also be available at this website following the conclusion of the call.
About TransUnion
TransUnion is a leading global risk and information solutions provider to businesses and consumers. The Company provides consumer reports, risk scores, analytical services and decisioning capabilities to businesses. Businesses embed its solutions into their process workflows to acquire new customers, assess consumer ability to pay for services, identify cross-selling opportunities, measure and manage debt portfolio risk, collect debt, verify consumer identities and investigate potential fraud. Consumers use its solutions to view their credit profiles and access analytical tools that help them understand and manage their personal information and take precautions against identity theft.
Availability of Information on TransUnion’s Website
Investors and others should note that TransUnion routinely announces material information to investors and the marketplace using SEC filings, press releases, public conference calls, webcasts and the TransUnion Investor Relations website. While not all of the information that the Company posts to the TransUnion Investor Relations website is of a material nature, some information could be deemed to be material. Accordingly, the Company encourages investors, the media, and others interested in TransUnion to review the information that it shares on www.transunion.com/tru.
Non-GAAP Financial Measures
This earnings release presents constant currency growth rates assuming foreign currency exchange rates are consistent between years. This allows financial results to be evaluated without the impact of fluctuations in foreign currency exchange rates. This earnings release also presents organic constant currency growth rates, which assumes consistent foreign currency exchange rates between years and also eliminates the impact of our recent acquisitions. This allows financial results to be evaluated without the impact of fluctuations in foreign currency exchange rates and the impacts of recent acquisitions.
This earnings release also presents Adjusted Revenue, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Effective Tax Rate, Adjusted Net Income (Loss) and Adjusted Diluted Earnings per Share for all periods presented. These are important financial measures for the Company but are not financial measures as defined by GAAP. We present Adjusted Revenue as a supplemental measure of revenue because we believe it provides a basis to compare revenue between periods. We present Adjusted EBITDA and Adjusted Net Income as supplemental measures of our operating performance because these measures eliminate the impact of certain items that we do not consider indicative of our cash operations and ongoing operating performance. Adjusted EBITDA is also a measure frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies similar to ours. Our board of directors and executive management team use Adjusted Revenue and Adjusted EBITDA as compensation measures. Under the credit agreement governing our senior secured credit facility, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is tied to a ratio based on Adjusted EBITDA. These financial measures should be reviewed in conjunction with the relevant GAAP financial measures and are not presented as alternative measures of GAAP. Other companies in our industry may define or calculate these measures differently than we do, limiting their usefulness as comparative measures. Because of these limitations, these non-GAAP financial measures should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP, including operating income, operating margin, effective tax rate, net income (loss) attributable to the Company, earnings per share or cash provided by operating activities. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the attached Schedules.
We define Adjusted Revenue as GAAP revenue adjusted for certain acquisition-related deferred revenue and non-core contract-related revenue as further discussed in the footnotes of the attached Schedules 1, 2, and 3. Beginning in the third quarter of 2019, we no longer have these adjustments to revenue. We define Adjusted EBITDA as net income (loss) attributable to TransUnion plus (less) loss (income) from discontinued operations, plus net interest expense, plus (less) provision (benefit) for income taxes, plus depreciation and amortization, plus (less) the revenue adjustments included in Adjusted Revenue, plus stock-based compensation, plus mergers, acquisitions, divestitures and business optimization-related expenses including Callcredit integration-related expenses, plus (less) certain other expenses (income). We define Adjusted Net Income as net income (loss) attributable to TransUnion plus (less) loss (gain) from discontinued operations, plus (less) the revenue adjustments included in Adjusted Revenue, plus stock-based compensation, plus mergers, acquisitions, divestitures and business optimization-related expenses including Callcredit integration-related expenses, plus (less) certain other expenses (income), plus amortization of certain intangible assets, plus or minus the related changes in provision for income taxes, less any one-time tax provision benefits from the Tax Cuts and Jobs Act. We define Adjusted Diluted Earnings per Share as Adjusted Net Income divided by the weighted-average diluted shares outstanding. The above definitions apply to our calculations for the periods shown on schedules 1 through 6.
Forward-Looking Statements
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of TransUnion’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those described in the forward-looking statements. Any statements made in this earnings release that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements. These statements often include words such as “anticipate,” “expect,” “guidance,” “suggest,” “plan,” “believe,” “intend,” “estimate,” “target,” “project,” “should,” “could,” “would,” “may,” “will,” “forecast,” “outlook,” “potential,” “continues,” “seeks,” “predicts,” or the negative of these words and other similar expressions. Factors that could cause actual results to differ materially from those described in the forward-looking statements include macroeconomic and industry trends and adverse developments in the debt, consumer credit and financial services markets; our ability to provide competitive services and prices; our ability to retain or renew existing agreements with large or long-term customers; our ability to maintain the security and integrity of our data; our ability to deliver services timely without interruption; our ability to maintain our access to data sources; government regulation and changes in the regulatory environment; litigation or regulatory proceedings; regulatory oversight of “critical activities”; our ability to effectively manage our costs; economic and political stability in the United States and international markets where we operate; our ability to effectively develop and maintain strategic alliances and joint ventures; our ability to timely develop new services and the market’s willingness to adopt our new services; our ability to manage and expand our operations and keep up with rapidly changing technologies; our ability to make acquisitions, successfully integrate the operations of acquired businesses and realize the intended benefits of such acquisitions; our ability to protect and enforce our intellectual property, trade secrets and other forms of unpatented intellectual property; our ability to defend our intellectual property from infringement claims by third parties; the ability of our outside service providers and key vendors to fulfill their obligations to us; further consolidation in our end-customer markets; the increased availability of free or inexpensive consumer information; losses against which we do not insure; our ability to make timely payments of principal and interest on our indebtedness; our ability to satisfy covenants in the agreements governing our indebtedness; our ability to maintain our liquidity; share repurchase plans; our reliance on key management personnel; and other one-time events and other factors that can be found in our Annual Report on Form 10-K for the year ended December 31, 2018, and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K, which are filed with the Securities and Exchange Commission and are available on TransUnion’s website (www.transunion.com/tru) and on the Securities and Exchange Commission’s website (www.sec.gov). Many of these factors are beyond our control. The forward-looking statements contained in this earnings release speak only as of the date of this earnings release. We undertake no obligation to publicly release the result of any revisions to these forward-looking statements to reflect the impact of events or circumstances that may arise after the date of this earnings release.
In addition to factors previously disclosed in TransUnion’s reports filed with the Securities and Exchange Commission and those identified elsewhere in this press release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: failure to realize the benefits expected from the recent business acquisitions; the effects of pending and future legislation; risks related to disruption of management time from ongoing business operations due to the recent business acquisitions; macroeconomic factors beyond TransUnion’s control; risks related to TransUnion’s indebtedness and other consequences associated with mergers, acquisitions and divestitures, and legislative and regulatory actions and reforms.
For More Information
E-mail: Investor.Relations@transunion.com
Telephone: 312.985.2860
TRANSUNION AND SUBSIDIARIES
Consolidated Balance Sheets
(in millions, except per share data)
| September 30, 2019 | December 31, 2018 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 235.9 | $ | 187.4 | ||||
| Trade accounts receivable, net of allowance of $18.8 and $13.5 | 458.2 | 456.8 | ||||||
| Other current assets | 198.0 | 136.5 | ||||||
| Current assets of discontinued operations | — | 60.8 | ||||||
| Total current assets | 892.1 | 841.5 | ||||||
| Property, plant and equipment, net of accumulated depreciation and amortization of $430.6 and $366.2 | 201.8 | 220.3 | ||||||
| Goodwill | 3,312.6 | 3,293.6 | ||||||
| Other intangibles, net of accumulated amortization of $1,405.3 and $1,206.7 | 2,381.0 | 2,548.1 | ||||||
| Other assets | 234.5 | 136.3 | ||||||
| Total assets | $ | 7,022.0 | $ | 7,039.8 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Trade accounts payable | $ | 174.5 | $ | 169.9 | ||||
| Short-term debt and current portion of long-term debt | 93.9 | 71.7 | ||||||
| Other current liabilities | 359.7 | 284.1 | ||||||
| Current liabilities of discontinued operations | — | 22.8 | ||||||
| Total current liabilities | 628.1 | 548.5 | ||||||
| Long-term debt | 3,646.0 | 3,976.4 | ||||||
| Deferred taxes | 442.0 | 478.0 | ||||||
| Other liabilities | 176.4 | 54.7 | ||||||
| Total liabilities | 4,892.5 | 5,057.6 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock, $0.01 par value; 1.0 billion shares authorized at September 30, 2019 and December 31, 2018, 193.2 million and 190.0 million shares issued at September 30, 2019 and December 31, 2018, respectively, and 188.3 million shares and 185.7 million shares outstanding as of September, 2019 and December 31, 2018, respectively | 1.9 | 1.9 | ||||||
| Additional paid-in capital | 1,999.7 | 1,947.3 | ||||||
| Treasury stock at cost; 4.8 million and 4.2 million shares at September 30, 2019 and December 31, 2018, respectively | (177.9 | ) | (139.9 | ) | ||||
| Retained earnings | 583.4 | 363.1 | ||||||
| Accumulated other comprehensive loss | (369.7 | ) | (282.7 | ) | ||||
| Total TransUnion stockholders’ equity | 2,037.4 | 1,889.7 | ||||||
| Noncontrolling interests | 92.1 | 92.5 | ||||||
| Total stockholders’ equity | 2,129.5 | 1,982.2 | ||||||
| Total liabilities and stockholders’ equity | $ | 7,022.0 | $ | 7,039.8 | ||||
TRANSUNION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
(in millions, except per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Revenue | $ | 689.3 | $ | 603.6 | $ | 1,970.5 | $ | 1,704.1 | ||||||||
| Operating expenses | ||||||||||||||||
| Cost of services (exclusive of depreciation and amortization below) | 220.8 | 207.5 | 645.2 | 579.0 | ||||||||||||
| Selling, general and administrative | 208.4 | 189.8 | 600.8 | 524.6 | ||||||||||||
| Depreciation and amortization | 88.7 | 84.2 | 271.4 | 218.8 | ||||||||||||
| Total operating expenses | 518.0 | 481.5 | 1,517.4 | 1,322.3 | ||||||||||||
| Operating income | 171.3 | 122.1 | 453.1 | 381.7 | ||||||||||||
| Non-operating income and (expense) | ||||||||||||||||
| Interest expense | (43.5 | ) | (44.0 | ) | (133.7 | ) | (92.5 | ) | ||||||||
| Interest income | 2.2 | 1.3 | 5.4 | 3.5 | ||||||||||||
| Earnings from equity method investments | 3.1 | 3.2 | 10.2 | 8.4 | ||||||||||||
| Other income and (expense), net | (20.6 | ) | (3.2 | ) | (0.7 | ) | (45.6 | ) | ||||||||
| Total non-operating income and (expense) | (58.8 | ) | (42.7 | ) | (118.7 | ) | (126.1 | ) | ||||||||
| Income from continuing operations before income taxes | 112.5 | 79.4 | 334.3 | 255.6 | ||||||||||||
| Provision for income taxes | (24.2 | ) | (28.6 | ) | (64.2 | ) | (72.1 | ) | ||||||||
| Income from continuing operations | 88.3 | 50.8 | 270.2 | 183.5 | ||||||||||||
| Discontinued operations, net of tax | — | (1.4 | ) | (4.6 | ) | (1.4 | ) | |||||||||
| Net income | 88.3 | 49.4 | 265.6 | 182.0 | ||||||||||||
| Less: net (income) loss attributable to the noncontrolling interests | 3.4 | (3.1 | ) | (1.5 | ) | (7.6 | ) | |||||||||
| Net income attributable to TransUnion | $ | 91.7 | $ | 46.3 | $ | 264.1 | $ | 174.4 | ||||||||
| Income from continuing operations | $ | 88.3 | $ | 50.8 | $ | 270.2 | $ | 183.5 | ||||||||
| Less: income from continuing operations attributable to noncontrolling interests | 3.4 | (3.1 | ) | (1.5 | ) | (7.6 | ) | |||||||||
| Income from continuing operations attributable to TransUnion | 91.7 | 47.7 | 268.7 | 175.9 | ||||||||||||
| Discontinued operations, net of tax | — | (1.4 | ) | (4.6 | ) | (1.4 | ) | |||||||||
| Net income attributable to TransUnion | $ | 91.7 | $ | 46.3 | $ | 264.1 | $ | 174.4 | ||||||||
| Basic earnings per common share from: | ||||||||||||||||
| Income from continuing operations attributable to TransUnion | $ | 0.49 | $ | 0.26 | $ | 1.43 | $ | 0.95 | ||||||||
| Discontinued operations, net of tax | — | (0.01 | ) | (0.02 | ) | (0.01 | ) | |||||||||
| Net Income attributable to TransUnion | $ | 0.49 | $ | 0.25 | $ | 1.41 | $ | 0.95 | ||||||||
| Diluted earnings per common share from: | ||||||||||||||||
| Income from continuing operations attributable to TransUnion | $ | 0.48 | $ | 0.25 | $ | 1.40 | $ | 0.92 | ||||||||
| Discontinued operations, net of tax | — | (0.01 | ) | (0.02 | ) | (0.01 | ) | |||||||||
| Net Income attributable to TransUnion | $ | 0.48 | $ | 0.24 | $ | 1.38 | $ | 0.91 | ||||||||
| Weighted-average shares outstanding: | ||||||||||||||||
| Basic | 188.2 | 185.1 | 187.5 | 184.4 | ||||||||||||
| Diluted | 192.0 | 191.2 | 191.6 | 190.8 | ||||||||||||
As a result of displaying amounts in millions, rounding differences may exist in the table above.
TRANSUNION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(in millions)
| Nine Months Ended September 30, | ||||||||
| 2019 | 2018 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 265.6 | $ | 182.0 | ||||
| Add: loss from discontinued operations, net of tax | 4.6 | 1.4 | ||||||
| Income from continuing operations | 270.2 | 183.5 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 271.4 | 218.8 | ||||||
| Loss on debt financing transactions | 1.5 | 12.0 | ||||||
| Amortization and (gain) loss on fair value of hedge instrument | — | (0.7 | ) | |||||
| Net (gain) impairment of investments in nonconsolidated affiliates and assets-held-for-sale | (20.6 | ) | 1.5 | |||||
| Equity in net income of affiliates, net of dividends | (1.2 | ) | (3.1 | ) | ||||
| Deferred taxes | (9.7 | ) | (17.9 | ) | ||||
| Amortization of discount and deferred financing fees | 4.7 | 3.2 | ||||||
| Stock-based compensation | 29.7 | 36.9 | ||||||
| Payment of contingent obligation | (0.4 | ) | (0.2 | ) | ||||
| Provision for losses on trade accounts receivable | 7.9 | 6.3 | ||||||
| Other | 2.8 | 3.0 | ||||||
| Changes in assets and liabilities: | ||||||||
| Trade accounts receivable | (13.2 | ) | (79.4 | ) | ||||
| Other current and long-term assets | (35.4 | ) | (5.5 | ) | ||||
| Trade accounts payable | 10.8 | 8.3 | ||||||
| Other current and long-term liabilities | 69.2 | 43.6 | ||||||
| Cash provided by operating activities of continuing operations | 587.7 | 410.3 | ||||||
| Cash used in operating activities of discontinued operations | (7.3 | ) | (0.9 | ) | ||||
| Cash provided by operating activities | 580.4 | 409.4 | ||||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | (132.1 | ) | (118.3 | ) | ||||
| Proceeds from sale of trading securities | 3.5 | 1.8 | ||||||
| Purchases of trading securities | (1.9 | ) | (2.0 | ) | ||||
| Proceeds from sale of other investments | 18.2 | 15.9 | ||||||
| Purchases of other investments | (31.4 | ) | (22.7 | ) | ||||
| Acquisitions and purchases of noncontrolling interests, net of cash acquired | (46.2 | ) | (1,800.4 | ) | ||||
| Proceeds from disposals of discontinued operations, net of cash on hand | 40.3 | (0.5 | ) | |||||
| Other | (5.5 | ) | (0.9 | ) | ||||
| Cash used in investing activities of continuing operations | (155.1 | ) | (1,927.1 | ) | ||||
| Cash used in investing activities of discontinued operations | — | (0.1 | ) | |||||
| Cash used in investing activities | (155.1 | ) | (1,927.2 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from Senior Secured Term Loan B-4 | — | 1,000.0 | ||||||
| Proceeds from Senior Secured Term Loan A-2 | — | 800.0 | ||||||
| Proceeds from senior secured revolving line of credit | — | 125.0 | ||||||
| Payments of senior secured revolving line of credit | — | (210.0 | ) | |||||
| Repayments of debt | (313.9 | ) | (39.3 | ) | ||||
| Debt financing fees | — | (33.8 | ) | |||||
| Proceeds from issuance of common stock and exercise of stock options | 22.4 | 23.3 | ||||||
| Dividends to shareholders | (42.6 | ) | (27.7 | ) | ||||
| Distributions to noncontrolling interests | (1.2 | ) | (2.8 | ) | ||||
| Employee taxes paid on restricted stock units recorded as treasury stock | (37.7 | ) | (0.8 | ) | ||||
| Cash (used in) provided by financing activities | (373.0 | ) | 1,633.9 | |||||
| Effect of exchange rate changes on cash and cash equivalents | (3.8 | ) | (5.3 | ) | ||||
| Net change in cash and cash equivalents | 48.5 | 110.8 | ||||||
| Cash and cash equivalents, beginning of period | 187.4 | 115.8 | ||||||
| Cash and cash equivalents, end of period | $ | 235.9 | $ | 226.6 | ||||
As a result of displaying amounts in millions, rounding differences may exist in the table above.
SCHEDULE 1
TRANSUNION AND SUBSIDIARIES
Revenue, Adjusted Revenue, and Adjusted EBITDA growth rates as Reported, CC, Inorganic, Organic and Organic CC (Unaudited)
| For the Three Months Ended September 30, 2019 compared with the Three Months Ended September 30, 2018 | |||||||||||||||
| Reported | CC Growth(2) | Inorganic(1,3) | Organic Growth(4) | Organic CC Growth(5) | |||||||||||
| Revenue: | |||||||||||||||
| Consolidated(1) | 14.2 | % | 15.1 | % | 0.9 | % | 13.3 | % | 14.2 | % | |||||
| U.S. Markets | 12.1 | % | 12.1 | % | 1.4 | % | 10.7 | % | 10.8 | % | |||||
| Financial Services | 12.9 | % | 12.9 | % | — | % | 12.9 | % | 12.9 | % | |||||
| Emerging Verticals | 11.3 | % | 11.3 | % | 2.9 | % | 8.3 | % | 8.4 | % | |||||
| International(1) | 24.3 | % | 28.3 | % | — | % | 24.3 | % | 28.3 | % | |||||
| Canada | 10.9 | % | 11.9 | % | — | % | 10.9 | % | 11.9 | % | |||||
| Latin America | 7.5 | % | 13.4 | % | — | % | 7.5 | % | 13.4 | % | |||||
| United Kingdom(1) | nm | nm | nm | nm | nm | ||||||||||
| Africa | 2.4 | % | 7.3 | % | — | % | 2.4 | % | 7.3 | % | |||||
| India | 33.0 | % | 33.7 | % | — | % | 33.0 | % | 33.7 | % | |||||
| Asia Pacific | 1.4 | % | 0.6 | % | — | % | 1.4 | % | 0.6 | % | |||||
| Consumer Interactive | 7.3 | % | 7.3 | % | — | % | 7.3 | % | 7.3 | % | |||||
| Adjusted Revenue: | |||||||||||||||
| Consolidated(1) | 10.9 | % | 11.8 | % | 0.8 | % | 10.1 | % | 11.0 | % | |||||
| U.S. Markets | 11.8 | % | 11.8 | % | 1.4 | % | 10.4 | % | 10.4 | % | |||||
| Financial Services | 12.9 | % | 12.9 | % | — | % | 12.9 | % | 12.9 | % | |||||
| Emerging Verticals | 10.6 | % | 10.6 | % | 2.9 | % | 7.7 | % | 7.7 | % | |||||
| International(1) | 10.1 | % | 13.6 | % | — | % | 10.1 | % | 13.6 | % | |||||
| Canada | 10.9 | % | 11.9 | % | — | % | 10.9 | % | 11.9 | % | |||||
| Latin America | 7.5 | % | 13.4 | % | — | % | 7.5 | % | 13.4 | % | |||||
| United Kingdom(1) | 6.1 | % | 12.1 | % | — | % | 6.1 | % | 12.1 | % | |||||
| Africa | 2.4 | % | 7.3 | % | — | % | 2.4 | % | 7.3 | % | |||||
| India | 33.0 | % | 33.7 | % | — | % | 33.0 | % | 33.7 | % | |||||
| Asia Pacific | 1.4 | % | 0.6 | % | — | % | 1.4 | % | 0.6 | % | |||||
| Consumer Interactive | 7.3 | % | 7.3 | % | — | % | 7.3 | % | 7.3 | % | |||||
| Adjusted EBITDA: | |||||||||||||||
| Consolidated(1) | 14.7 | % | 15.6 | % | 0.1 | % | 14.6 | % | 15.5 | % | |||||
| U.S. Markets | 18.3 | % | 18.3 | % | 0.1 | % | 18.2 | % | 18.2 | % | |||||
| International(1) | 11.9 | % | 15.5 | % | — | % | 11.9 | % | 15.5 | % | |||||
| Consumer Interactive | 10.3 | % | 10.3 | % | — | % | 10.3 | % | 10.3 | % | |||||
SCHEDULE 1
TRANSUNION AND SUBSIDIARIES
Revenue, Adjusted Revenue, and Adjusted EBITDA growth rates as Reported, CC, Inorganic, Organic and Organic CC (Unaudited)
| For the Nine Months Ended September 30, 2019 compared with the Nine Months Ended September 30, 2018 | |||||||||||||||
| Reported | CC Growth(2) | Inorganic(1,3) | Organic Growth(4) | Organic CC Growth(5) | |||||||||||
| Revenue: | |||||||||||||||
| Consolidated(1) | 15.6 | % | 16.9 | % | 6.8 | % | 8.9 | % | 10.1 | % | |||||
| U.S. Markets | 11.1 | % | 11.1 | % | 3.9 | % | 7.2 | % | 7.2 | % | |||||
| Financial Services | 9.1 | % | 9.1 | % | 1.5 | % | 7.6 | % | 7.6 | % | |||||
| Emerging Verticals | 13.4 | % | 13.4 | % | 6.6 | % | 6.7 | % | 6.8 | % | |||||
| International(1) | 38.1 | % | 44.4 | % | 22.1 | % | 16.0 | % | 22.3 | % | |||||
| Canada | 7.2 | % | 10.6 | % | — | % | 7.2 | % | 10.6 | % | |||||
| Latin America | 3.2 | % | 11.3 | % | — | % | 3.2 | % | 11.3 | % | |||||
| United Kingdom(1) | nm | nm | nm | nm | nm | ||||||||||
| Africa | (6.7 | )% | 4.0 | % | — | % | (6.7 | )% | 4.0 | % | |||||
| India | 34.1 | % | 40.5 | % | — | % | 34.1 | % | 40.5 | % | |||||
| Asia Pacific | 2.6 | % | 2.5 | % | — | % | 2.6 | % | 2.5 | % | |||||
| Consumer Interactive | 5.7 | % | 5.7 | % | — | % | 5.7 | % | 5.7 | % | |||||
| Adjusted Revenue: | |||||||||||||||
| Consolidated(1) | 14.8 | % | 16.0 | % | 7.0 | % | 7.8 | % | 9.0 | % | |||||
| U.S. Markets | 11.0 | % | 11.1 | % | 3.9 | % | 7.1 | % | 7.1 | % | |||||
| Financial Services | 9.1 | % | 9.1 | % | 1.5 | % | 7.6 | % | 7.6 | % | |||||
| Emerging Verticals | 13.2 | % | 13.2 | % | 6.7 | % | 6.5 | % | 6.6 | % | |||||
| International(1) | 33.1 | % | 39.1 | % | 22.5 | % | 10.6 | % | 16.7 | % | |||||
| Canada | 7.2 | % | 10.6 | % | — | % | 7.2 | % | 10.6 | % | |||||
| Latin America | 3.2 | % | 11.3 | % | — | % | 3.2 | % | 11.3 | % | |||||
| United Kingdom(1) | nm | nm | nm | nm | nm | ||||||||||
| Africa | (6.7 | )% | 4.0 | % | — | % | (6.7 | )% | 4.0 | % | |||||
| India | 34.1 | % | 40.5 | % | — | % | 34.1 | % | 40.5 | % | |||||
| Asia Pacific | 2.6 | % | 2.5 | % | — | % | 2.6 | % | 2.5 | % | |||||
| Consumer Interactive | 5.7 | % | 5.7 | % | — | % | 5.7 | % | 5.7 | % | |||||
| Adjusted EBITDA: | |||||||||||||||
| Consolidated(1) | 17.3 | % | 18.6 | % | 5.8 | % | 11.5 | % | 12.8 | % | |||||
| U.S. Markets | 14.8 | % | 14.8 | % | 1.4 | % | 13.4 | % | 13.4 | % | |||||
| International(1) | 43.4 | % | 50.1 | % | 24.5 | % | 18.8 | % | 25.6 | % | |||||
| Consumer Interactive | 6.1 | % | 6.1 | % | — | % | 6.1 | % | 6.1 | % | |||||
nm: not meaningful
- We acquired Callcredit, which is our United Kingdom region in our International segment, on June 19, 2018. Our 2018 consolidated, International segment and United Kingdom region revenue, Adjusted Revenue and Adjusted EBITDA include the activity of Callcredit from the date of acquisition, which obscures comparability of our results between periods.
- CC (constant currency) growth rates assume foreign currency exchange rates are consistent between years. This allows financial results to be evaluated without the impact of fluctuations in foreign currency exchange rates.
- Inorganic growth rate represents growth attributable to the first twelve months of activity for recent business acquisitions.
- Organic growth rate is the reported growth rate less the inorganic growth rate.
- Organic CC growth rate is the CC growth rate less inorganic growth rate.
SCHEDULE 2
TRANSUNION AND SUBSIDIARIES
Consolidated and Segment Revenue, Adjusted Revenue, Adjusted EBITDA, and Adjusted EBITDA Margins (Unaudited)
(dollars in millions)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Revenue and Adjusted Revenue: | |||||||||||||||
| U.S. Markets gross revenue | |||||||||||||||
| Financial Services | $ | 225.3 | $ | 199.6 | $ | 627.4 | $ | 574.8 | |||||||
| Emerging Verticals | 194.9 | 175.1 | 567.5 | 500.4 | |||||||||||
| Total U.S. Markets gross revenue | 420.2 | 374.8 | 1,194.9 | 1,075.3 | |||||||||||
| Acquisition revenue - related adjustments(1) | — | 1.1 | 0.4 | 1.1 | |||||||||||
| U.S. Markets gross Adjusted Revenue | $ | 420.2 | $ | 375.9 | $ | 1,195.2 | $ | 1,076.4 | |||||||
| International gross revenue | |||||||||||||||
| Canada | 27.3 | 24.6 | 75.7 | 70.5 | |||||||||||
| Latin America | 26.4 | 24.6 | 77.9 | 75.6 | |||||||||||
| UK | 47.6 | 28.2 | 136.4 | 35.9 | |||||||||||
| Africa | 15.7 | 15.3 | 44.7 | 47.9 | |||||||||||
| India | 27.4 | 20.6 | 80.0 | 59.7 | |||||||||||
| Asia Pacific | 15.6 | 15.4 | 42.4 | 41.3 | |||||||||||
| Total International gross revenue | 160.0 | 128.7 | 457.1 | 330.9 | |||||||||||
| Acquisition revenue - related adjustments(1) | — | 16.6 | 5.6 | 16.6 | |||||||||||
| International Adjusted Revenue | $ | 160.0 | $ | 145.3 | $ | 462.7 | $ | 347.6 | |||||||
| Consumer Interactive gross revenue | $ | 127.8 | $ | 119.1 | $ | 374.7 | $ | 354.6 | |||||||
| Less: intersegment eliminations | |||||||||||||||
| U.S. Markets | (17.1 | ) | (17.5 | ) | (51.8 | ) | (52.4 | ) | |||||||
| International | (1.3 | ) | (1.3 | ) | (3.8 | ) | (3.9 | ) | |||||||
| Consumer Interactive | (0.2 | ) | (0.2 | ) | (0.6 | ) | (0.5 | ) | |||||||
| Total intersegment eliminations | (18.7 | ) | (19.0 | ) | (56.2 | ) | (56.8 | ) | |||||||
| Total revenue, as reported | $ | 689.3 | $ | 603.6 | $ | 1,970.5 | $ | 1,704.1 | |||||||
| Acquisition revenue-related adjustments(1) | — | 17.7 | 5.9 | 17.7 | |||||||||||
| Consolidated Adjusted Revenue | $ | 689.3 | $ | 621.3 | $ | 1,976.4 | $ | 1,721.8 | |||||||
| Adjusted EBITDA: | |||||||||||||||
| U.S. Markets | $ | 181.0 | $ | 153.0 | $ | 498.5 | $ | 434.3 | |||||||
| International | 64.0 | 57.3 | 188.6 | 131.5 | |||||||||||
| Consumer Interactive | 66.5 | 60.3 | 185.8 | 175.2 | |||||||||||
| Corporate | (30.7 | ) | (25.7 | ) | (89.4 | ) | (72.8 | ) | |||||||
| Consolidated Adjusted EBITDA | $ | 280.9 | $ | 244.9 | $ | 783.5 | $ | 668.1 | |||||||
| Adjusted EBITDA margin: | |||||||||||||||
| U.S. Markets | 43.1 | % | 40.7 | % | 41.7 | % | 40.3 | % | |||||||
| International | 40.0 | % | 39.4 | % | 40.8 | % | 37.8 | % | |||||||
| Consumer Interactive | 52.1 | % | 50.7 | % | 49.6 | % | 49.4 | % | |||||||
| Consolidated | 40.7 | % | 39.4 | % | 39.6 | % | 38.8 | % | |||||||
Segment Adjusted EBITDA margins are calculated using segment gross Adjusted Revenue and segment Adjusted EBITDA. Consolidated Adjusted EBITDA margin is calculated using consolidated Adjusted Revenue and consolidated Adjusted EBITDA.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Reconciliation of net income attributable to TransUnion to consolidated Adjusted EBITDA: | |||||||||||||||
| Net income attributable to TransUnion | $ | 91.7 | $ | 46.3 | $ | 264.1 | $ | 174.4 | |||||||
| Discontinued operations, net of tax | — | 1.4 | 4.6 | 1.4 | |||||||||||
| Net income from continuing operations attributable to TransUnion | 91.7 | 47.7 | 268.7 | 175.9 | |||||||||||
| Net interest expense | 41.3 | 42.6 | 128.2 | 89.0 | |||||||||||
| Provision for income taxes | 24.2 | 28.6 | 64.2 | 72.1 | |||||||||||
| Depreciation and amortization | 88.7 | 84.2 | 271.4 | 218.8 | |||||||||||
| EBITDA | 246.0 | 203.2 | 732.5 | 555.8 | |||||||||||
| Adjustments to EBITDA: | |||||||||||||||
| Acquisition-related revenue adjustments(1) | — | 17.7 | 5.9 | 17.7 | |||||||||||
| Stock-based compensation(2) | 14.7 | 16.3 | 35.6 | 43.2 | |||||||||||
| Mergers and acquisitions, divestitures and business optimization(3) | 4.8 | 6.2 | (7.8 | ) | 35.3 | ||||||||||
| Other(4) | 15.4 | 1.5 | 17.3 | 16.1 | |||||||||||
| Total adjustments to EBITDA | 34.9 | 41.7 | 51.0 | 112.4 | |||||||||||
| Consolidated Adjusted EBITDA | $ | 280.9 | $ | 244.9 | $ | 783.5 | $ | 668.1 | |||||||
As a result of displaying amounts in millions, rounding differences may exist in the tables above and footnotes below.
- This adjustment represents certain non-cash adjustments related to acquired entities, predominantly adjustments to increase revenue resulting from purchase accounting reductions to deferred revenue we record on the opening balance sheets of acquired entities. Deferred revenue results when a company receives payment in advance of fulfilling their performance obligations under contracts. Business combination accounting rules require us to record deferred revenue of acquired entities at fair value if we are obligated to perform any future services under these contracts. The fair value of this deferred revenue is determined based on the direct and indirect incremental costs of fulfilling our performance obligations under these contracts, plus a normal profit margin. Generally, this fair value calculation results in a reduction to the purchased deferred revenue balance. The above adjustment includes an estimate for the increase in revenue equal to the difference between what the acquired entities would have recorded as revenue and the lower revenue we record as a result of the reduced deferred revenue balance. This increase is partially offset by an estimated decrease to revenue for certain acquired non-core customer contracts that are not classified as discontinued operations that will expire within approximately one year from the date of acquisition. Beginning in the third quarter of 2019, we no longer have these adjustments to revenue. We present Adjusted Revenue as a supplemental measure of our revenue because we believe it provides meaningful information regarding our revenue and provides a basis to compare revenue between periods. In addition, our board of directors and executive management team use Adjusted Revenue as a compensation measure under our incentive compensation plans. The table above provides a reconciliation for revenue to Adjusted Revenue.
- Consisted of stock-based compensation and cash-settled stock-based compensation.
- For the three months ended September 30, 2019, consisted of the following adjustments: a $2.0 million loss on assets of a small business in our United Kingdom region that are classified as held-for-sale; $2.0 million of Callcredit integration costs; a $0.6 million adjustment to contingent consideration expense from previous acquisitions; $0.5 million of acquisition expenses; and a $(0.2) million reimbursement for transition services provided to the buyers of certain of our discontinued operations.
For the nine months ended September 30, 2019, consisted of the following adjustments: a $(31.2) million gain on a Cost Method investment resulting from an observable price change for a similar investment of the same issuer; $(0.4) million reimbursement for transition services provided to the buyers of our discontinued operations; $10.5 million of Callcredit integration costs; a $8.6 million loss on the impairment of certain Cost Method investments; $2.1 million of acquisition expenses; a $2.0 million loss on assets of a small business in our United Kingdom region that are classified as held-for-sale; and a $0.6 million adjustment to contingent consideration expense from previous acquisitions.
For the three months ended September 30, 2018, consisted of the following adjustments: $4.2 million of Callcredit integration costs; $1.7 million of acquisition expenses; a $0.2 million loss on the divestiture of a small business operation; a $0.2 million loss from a fair value remeasurement of an investment in a nonconsolidated affiliate, offset by $(0.1) million for the portion that is attributable to the non-controlling interest; a $0.1 million adjustment to contingent consideration expense from previous acquisitions; and $(0.1) million of miscellaneous.
For the nine months ended September 30, 2018, consisted of the following adjustments: $28.7 million of acquisition expenses; $4.2 million of Callcredit integration costs; a $1.5 million net loss from the fair value remeasurements of investments in nonconsolidated affiliates; $1.2 million loss on the divestiture of a small business operation, offset by $(0.4) million for the portion that is attributable to the non-controlling interest; and a $0.1 million adjustment to contingent consideration expense from previous acquisitions. - For the three months ended September 30, 2019, consisted of the following adjustments: $19.7 million of expenses (including $1.8 million of administrative expenses) associated with the Fraud Incident offset by the ($7.1) million portion that is attributable to the non-controlling interest; $1.6 million from currency remeasurement; $0.7 million of deferred loan fees written off as a result of the prepayments on our debt; and $0.5 million of loan fees.
For the nine months ended September 30, 2019, consisted of the following adjustments: $19.7 million of expenses (including $1.8 million of administrative expenses) associated with the Fraud Incident offset by the ($7.1) million portion that is attributable to the non-controlling interest; $1.9 million from currency remeasurement; $1.5 million of loan fees; $1.5 million of deferred loan fees written off as a result of the prepayments on our debt; and $(0.1) million of miscellaneous.
For the three months ended September 30, 2018, consisted of the following adjustments: $1.0 million loss from currency remeasurement of our foreign operations; $0.5 million of loan fees; $0.1 million of fees related to new financing under our senior secured credit facility; and $(0.1) million of miscellaneous.
For the nine months ended September 30, 2018, consisted of the following adjustments: $12.0 million of fees related to new financing under our senior secured credit facility; a $3.3 million loss from currency remeasurement of our foreign operations; $1.1 million of loan fees; $0.5 million of fees incurred in connection with a secondary offering of shares of TransUnion common stock by certain of our stockholders; a $(0.7) million mark-to-market gain related to ineffectiveness of our interest rate hedge; and $(0.1) million of miscellaneous.
SCHEDULE 3
TRANSUNION AND SUBSIDIARIES
Adjusted Net Income and Adjusted Earnings Per Share - Unaudited
(in millions, except per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net income attributable to TransUnion | $ | 91.7 | $ | 46.3 | $ | 264.1 | $ | 174.4 | ||||||||
| Weighted-average shares outstanding: | ||||||||||||||||
| Basic | 188.2 | 185.1 | 187.5 | 184.4 | ||||||||||||
| Diluted | 192.0 | 191.2 | 191.6 | 190.8 | ||||||||||||
| Basic earnings per common share from: | ||||||||||||||||
| Income from continuing operations attributable to TransUnion | $ | 0.49 | $ | 0.26 | $ | 1.43 | $ | 0.95 | ||||||||
| Discontinued operations, net of tax | — | (0.01 | ) | (0.02 | ) | (0.01 | ) | |||||||||
| Net Income attributable to TransUnion | $ | 0.49 | $ | 0.25 | $ | 1.41 | $ | 0.95 | ||||||||
| Diluted earnings per common share from: | ||||||||||||||||
| Income from continuing operations attributable to TransUnion | $ | 0.48 | $ | 0.25 | $ | 1.40 | $ | 0.92 | ||||||||
| Discontinued operations, net of tax | — | (0.01 | ) | (0.02 | ) | (0.01 | ) | |||||||||
| Net Income attributable to TransUnion | $ | 0.48 | $ | 0.24 | $ | 1.38 | $ | 0.91 | ||||||||
| Reconciliation of net income attributable to TransUnion to Adjusted Net Income: | ||||||||||||||||
| Net income attributable to TransUnion | 91.7 | 46.3 | 264.1 | 174.4 | ||||||||||||
| Discontinued operations | — | 1.4 | 4.6 | 1.4 | ||||||||||||
| Net income from continuing operations attributable to TransUnion | 91.7 | 47.7 | 268.7 | 175.9 | ||||||||||||
| Adjustments before income tax items: | ||||||||||||||||
| Acquisition revenue-related adjustments (1) | — | 17.7 | 5.9 | 17.7 | ||||||||||||
| Stock-based compensation(2) | 14.7 | 16.3 | 35.6 | 43.2 | ||||||||||||
| Mergers and acquisitions, divestitures and business optimization(3) | 4.8 | 6.2 | (7.8 | ) | 35.3 | |||||||||||
| Other(4) | 14.9 | 1.0 | 15.9 | 15.0 | ||||||||||||
| Amortization of certain intangible assets(5) | 48.4 | 52.1 | 157.6 | 127.0 | ||||||||||||
| Total adjustments before income tax items | 82.8 | 93.4 | 207.2 | 238.2 | ||||||||||||
| Change in provision for income taxes per schedule 4 | (28.8 | ) | (16.4 | ) | (83.4 | ) | (63.1 | ) | ||||||||
| Adjusted Net Income | $ | 145.7 | $ | 124.7 | $ | 392.5 | $ | 351.0 | ||||||||
| Weighted-average shares outstanding: | ||||||||||||||||
| Basic | 188.2 | 185.1 | 187.5 | 184.4 | ||||||||||||
| Diluted | 192.0 | 191.2 | 191.6 | 190.8 | ||||||||||||
| Adjusted Earnings per Share: | ||||||||||||||||
| Basic | $ | 0.77 | $ | 0.67 | $ | 2.09 | $ | 1.90 | ||||||||
| Diluted(6) | $ | 0.76 | $ | 0.65 | $ | 2.05 | $ | 1.84 | ||||||||
As a result of displaying amounts in millions, rounding differences may exist in the table above and footnotes below.
- This adjustment represents certain non-cash adjustments related to acquired entities, predominantly adjustments to increase revenue resulting from purchase accounting reductions to deferred revenue we record on the opening balance sheets of acquired entities. Deferred revenue results when a company receives payment in advance of fulfilling their performance obligations under contracts. Business combination accounting rules require us to record deferred revenue of acquired entities at fair value if we are obligated to perform any future services under these contracts. The fair value of this deferred revenue is determined based on the direct and indirect incremental costs of fulfilling our performance obligations under these contracts, plus a normal profit margin. Generally, this fair value calculation results in a reduction to the purchased deferred revenue balance. The above adjustment includes an estimate for the increase in revenue equal to the difference between what the acquired entities would have recorded as revenue and the lower revenue we record as a result of the reduced deferred revenue balance. This increase is partially offset by an estimated decrease to revenue for certain acquired non-core customer contracts that are not classified as discontinued operations that will expire within approximately one year from the date of acquisition. Beginning in the third quarter of 2019, we no longer have these adjustments to revenue.
- Consisted of stock-based compensation and cash-settled stock-based compensation.
- For the three months ended September 30, 2019, consisted of the following adjustments: a $2.0 million loss on assets of a small business in our United Kingdom region that are classified as held-for-sale; $2.0 million of Callcredit integration costs; a $0.6 million adjustment to contingent consideration expense from previous acquisitions; $0.5 million of acquisition expenses; and a $(0.2) million reimbursement for transition services provided to the buyers of certain of our discontinued operations.
For the nine months ended September 30, 2019, consisted of the following adjustments: a $(31.2) million gain on a Cost Method investment resulting from an observable price change for a similar investment of the same issuer; $(0.4) million reimbursement for transition services provided to the buyers of our discontinued operations; $10.5 million of Callcredit integration costs; a $8.6 million loss on the impairment of certain Cost Method investments; $2.1 million of acquisition expenses; a $2.0 million loss on assets of a small business in our United Kingdom region that are classified as held-for-sale; and a $0.6 million adjustment to contingent consideration expense from previous acquisitions.
For the three months ended September 30, 2018, consisted of the following adjustments: $4.2 million of Callcredit integration costs; $1.7 million of acquisition expenses; a $0.2 million loss on the divestiture of a small business operation; a $0.2 million loss from a fair value remeasurement of an investment in a nonconsolidated affiliate, offset by $(0.1) million for the portion that is attributable to the non-controlling interest; a $0.1 million adjustment to contingent consideration expense from previous acquisitions; and $(0.1) million of miscellaneous.
For the nine months ended September 30, 2018, consisted of the following adjustments: $28.7 million of acquisition expenses; $4.2 million of Callcredit integration costs; a $1.5 million net loss from the fair value remeasurements of investments in nonconsolidated affiliates; $1.2 million loss on the divestiture of a small business operation, offset by $(0.4) million for the portion that is attributable to the non-controlling interest; and a $0.1 million adjustment to contingent consideration expense from previous acquisitions. - For the three months ended September 30, 2019, consisted of the following adjustments: $19.7 million of expenses (including $1.8 million of administrative expenses) associated with the Fraud Incident offset by the ($7.1) million portion that is attributable to the non-controlling interest; $1.6 million from currency remeasurement; and $0.7 million of deferred loan fees written off as a result of the prepayments on our debt.
For the nine months ended September 30, 2019, consisted of the following adjustments: $19.7 million of expenses (including $1.8 million of administrative expenses) associated with the Fraud Incident offset by the ($7.1) million portion that is attributable to the non-controlling interest; $1.9 million from currency remeasurement; and $1.5 million of deferred loan fees written off as a result of the prepayments on our debt.
For the three months ended September 30, 2018, consisted of the following adjustments: a $1.0 million loss from currency remeasurement of our foreign operations; $0.1 million of fees related to new financing under our senior secured credit facility; and $(0.1) million of miscellaneous.
For the nine months ended September 30, 2018, consisted of the following adjustments: $12.0 million of fees related to new financing under our senior secured credit facility; a $3.3 million loss from currency remeasurement of our foreign operations; $0.5 million of fees incurred in connection with a secondary offering of shares of TransUnion common stock by certain of our stockholders; a $(0.7) million mark-to-market gain related to ineffectiveness of our interest rate hedge; and $(0.1) million of miscellaneous.
- Consisted of amortization of intangible assets from our 2012 change in control and amortization of intangible assets established in business acquisitions after our 2012 change in control.
- As of September 30, 2019 and 2018, there were 1.1 million contingently issuable stock-based awards outstanding that were excluded from the diluted earnings per share calculation because the contingencies had not been met.
SCHEDULE 4
TRANSUNION AND SUBSIDIARIES
Effective Tax Rate and Adjusted Effective Tax Rate - Unaudited
(dollars in millions)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Income before income taxes | $ | 112.5 | $ | 79.4 | $ | 334.3 | $ | 255.6 | |||||||
| Total adjustments before income tax items from schedule 3 | 82.8 | 93.4 | 207.2 | 238.2 | |||||||||||
| Noncontrolling interest portion of Adjusted Net Income adjustments | 7.1 | — | 7.1 | — | |||||||||||
| Adjusted income before income taxes | $ | 202.4 | $ | 172.8 | $ | 548.7 | $ | 493.8 | |||||||
| (Provision) for income taxes | (24.2 | ) | (28.6 | ) | (64.2 | ) | (72.1 | ) | |||||||
| Adjustments for income taxes: | |||||||||||||||
| Tax effect of above adjustments(1) | (17.6 | ) | (16.1 | ) | (43.2 | ) | (50.2 | ) | |||||||
| Eliminate impact of excess tax benefits for share compensation(2) | (4.6 | ) | (7.6 | ) | (31.9 | ) | (25.7 | ) | |||||||
| Eliminate one time impact of tax reform items(3) | — | 5.6 | — | 5.6 | |||||||||||
| Other(4) | (6.6 | ) | 1.8 | (8.3 | ) | 7.2 | |||||||||
| Total adjustments for income taxes | (28.8 | ) | (16.4 | ) | (83.4 | ) | (63.1 | ) | |||||||
| Adjusted provision for income taxes | $ | (53.1 | ) | $ | (45.0 | ) | $ | (147.6 | ) | $ | (135.2 | ) | |||
| Effective tax rate | 21.6 | % | 36.0 | % | 19.2 | % | 28.2 | % | |||||||
| Adjusted Effective Tax Rate | 26.2 | % | 26.0 | % | 26.9 | % | 27.4 | % | |||||||
As a result of displaying amounts in millions, rounding differences may exist in the table above.
- Tax rates used to calculate the tax expense impact are based on the nature of each item.
- Eliminates the impact of excess tax benefits for share compensation.
- Eliminates one time impacts of tax reform, including remeasurement of domestic deferred tax balances at the new 21% tax rate and mandatory repatriation of unremitted earnings (net of previously recorded reserves).
- Eliminates impact of state tax rate changes on deferred taxes, valuation allowances on foreign net operating losses, and valuation allowances on capital losses and other discrete adjustments.
SCHEDULE 5
TRANSUNION AND SUBSIDIARIES
Segment Depreciation and Amortization - Unaudited
(in millions)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| U.S. Markets | $ | 56.3 | $ | 49.4 | $ | 169.4 | $ | 139.7 | |||||||
| International | 27.8 | 30.5 | 88.5 | 66.4 | |||||||||||
| Consumer Interactive | 3.3 | 3.1 | 9.7 | 9.0 | |||||||||||
| Corporate | 1.3 | 1.3 | 3.8 | 3.8 | |||||||||||
| Total depreciation and amortization | $ | 88.7 | $ | 84.2 | $ | 271.4 | $ | 218.8 | |||||||
As a result of displaying amounts in millions, rounding differences may exist in the table above.
SCHEDULE 6
TRANSUNION AND SUBSIDIARIES
Reconciliation of Non-GAAP Guidance - Unaudited
(dollars in millions)
| Three Months Ending December 31, 2019 | Twelve Months Ending December 31, 2019 | ||||||||||||||
| Low | High | Low | High | ||||||||||||
| Guidance reconciliation of revenue to Adjusted Revenue: | |||||||||||||||
| GAAP revenue | $ | 667 | $ | 672 | $ | 2,638 | $ | 2,643 | |||||||
| Acquisitions revenue-related adjustment(1) | — | — | 6 | 6 | |||||||||||
| Adjusted Revenue | $ | 667 | $ | 672 | $ | 2,644 | $ | 2,649 | |||||||
| Guidance reconciliation of net income attributable to TransUnion to Adjusted EBITDA: | |||||||||||||||
| Net income attributable to TransUnion | $ | 87 | $ | 91 | $ | 351 | $ | 355 | |||||||
| Discontinued operations, net of tax | — | — | 5 | 5 | |||||||||||
| Net income attributable to TransUnion from continuing operations | 87 | 91 | 356 | 359 | |||||||||||
| Interest, taxes and depreciation and amortization | 151 | 152 | 615 | 616 | |||||||||||
| EBITDA | 239 | 243 | 971 | 975 | |||||||||||
| Acquisitions revenue-related adjustment(1) | — | — | 6 | 6 | |||||||||||
| Stock-based compensation, mergers, acquisitions divestitures and business optimization-related expenses and other adjustments(2) | 26 | 26 | 71 | 71 | |||||||||||
| Adjusted EBITDA | $ | 264 | $ | 268 | $ | 1,048 | $ | 1,052 | |||||||
| Reconciliation of diluted earnings per share from continuing operations to Adjusted Diluted Earnings per Share from Continuing Operations: | |||||||||||||||
| Diluted earnings per share from continuing operations | $ | 0.45 | $ | 0.47 | $ | 1.86 | $ | 1.87 | |||||||
| Adjustments to diluted earnings per share(1)(2) | 0.24 | 0.24 | 0.89 | 0.89 | |||||||||||
| Adjusted Diluted Earnings per Share from Continuing Operations | $ | 0.69 | $ | 0.71 | $ | 2.74 | $ | 2.76 | |||||||
As a result of displaying amounts in millions, rounding differences may exist in the table above.
- This adjustment represents certain non-cash adjustments related to acquired entities, predominantly adjustments to increase revenue resulting from purchase accounting reductions to deferred revenue we record on the opening balance sheets of acquired entities. Deferred revenue results when a company receives payment in advance of fulfilling their performance obligations under contracts. Business combination accounting rules require us to record deferred revenue of acquired entities at fair value if we are obligated to perform any future services under these contracts. The fair value of this deferred revenue is determined based on the direct and indirect incremental costs of fulfilling our performance obligations under these contracts, plus a normal profit margin. Generally, this fair value calculation results in a reduction to the purchased deferred revenue balance. The above adjustment includes an estimate for the increase in revenue equal to the difference between what the acquired entities would have recorded as revenue and the lower revenue we record as a result of the reduced deferred revenue balance. This increase is partially offset by an estimated decrease to revenue for certain acquired non-core customer contracts that are not classified as discontinued operations that will expire within approximately one year. We present Adjusted Revenue as a supplemental measure of our revenue because we believe it provides meaningful information regarding our revenue and provides a basis to compare revenue between periods. In addition, our board of directors and executive management team use Adjusted Revenue as a compensation measure under our incentive compensation plan. The table above provides a reconciliation for revenue to Adjusted Revenue. The estimated adjustments to revenue are subject to change as we finalize the fair value assessments of the deferred revenue acquired with recent acquisitions and as we complete our assessment of the non-core customer contracts.
- This adjustment includes the same adjustments we make to our Adjusted EBITDA and Adjusted Net Income as discussed in the Non-GAAP Financial Measures section of our earnings release, which includes the Callcredit integration-related costs.