Equifax (EFX) Q2 2012 Earnings Call July 26, 2012 8:30 am ET Executives Jeffrey L. Dodge - Senior Vice President of Investor Relations Richard F. Smith - Chairman and Chief Executive Officer Lee Adrean - Chief Financial Officer and Corporate Vice President Analysts Georgios Mihalos - Crédit Suisse AG, Research Division Daniel R. Perlin - RBC Capital Markets, LLC, Research Division Carter Malloy - Stephens Inc., Research Division Andrew C. Steinerman - JP Morgan Chase & Co, Research Division Julio C. Quinteros - Goldman Sachs Group Inc., Research Division William A. Warmington - Raymond James & Associates, Inc., Research Division Eric J. Boyer - Wells Fargo Securities, LLC, Research Division David Togut - Evercore Partners Inc., Research Division Jaime Brandwood - UBS Investment Bank, Research Division Steven Shui - Stifel, Nicolaus & Co., Inc., Research Division Andrew W. Jeffrey - SunTrust Robinson Humphrey, Inc., Research Division Presentation Operator
We will refer to a non-GAAP financial measure, adjusted diluted EPS attributable to Equifax, which excludes acquisition-related amortization expense. And the loss on the deconsolidation of Brazil in 2011. Since the Brazilian operations were merged with Boa Vista on May 31, 2011, we also present revenue growth excluding Brazil to provide a clearer understanding of our revenue growth for those businesses that will continue to be reported in our operating results.These measures are detailed in our non-GAAP reconciliation tables included with earnings release and also posted on our website. Please refer to the non-GAAP reconciliation and our investor -- various investor presentations, which are posted in the Investor Relations section under the About Equifax tab on our website for further details. Now I'd like to turn it over to Rick. Richard F. Smith Thanks, Jeff. Good morning, everyone. Thank you for joining us this morning. It's to be no surprise that we are quite pleased with our second quarter performance. We continue to execute well against our strategic initiatives, capturing available opportunities from a cyclically strong mortgage market while continuing to deliver solid non-mortgage organic growth that's consistent with our long-term business model. Shortly, we'll update you on our full year outlook. But first, let's take a quick look at high some high-level financials for the second quarter. Total revenue was $536 million, up 10% from the second quarter when you -- excluding Brazil. Total revenue was up 14% for the quarter and up 15% in constant dollars. Operating margin was 24.8%, up 130 basis points from a year ago and consistent with the model we have weighed out for you over the past few quarters. Finally, adjusted EPS was $0.74 a share, up 21% from $0.61 a year ago. Broad 2011 and the first half of 2012, we have delivered solid non-mortgage organic performance with little to no help from the macro economy in most of the developed parts of the world. What we've been doing is focusing relentlessly on executing our strategic objectives, attracting and developing a world-class management team and leveraging our fierce determination to drive innovation and growth across the enterprise.
For the past 7 years, we have initiated a number of enterprise-wide programs, which have contributed greatly for a solid financial performance during a period of weak economic and business conditions. And to a relatively stronger performance in the most recent quarters, economic and business conditions have been somewhat more stable.You heard us talk about the following 7 points, that I'll go through here in a minute, in the past. But what is important is with each passing quarter, these 7 points become more ingrained into our operating DNA, and we've become an even stronger company. I'll go through the 7 points now that we've been focused on now for a number of years. Number one, it's an intense focus throughout the company on innovation and growth. Our NPI process simply gets better every day, and we are now developing new targets after reaching a best-in-class level of revenue contribution in 2011. You've heard us also mention our 4G teams, which draw upon some of our best and most talented individuals to develop strategies for opportunities that could potentially generate significant incremental revenue. Second is our strategic pricing. Strategic pricing is a proven driver of profitability, growth and stronger customer relationships. Our products typically have a very high ROI for our customers. With our unique data assets, it's very important that we understand this value, so we can price our services accordingly. In 2007, we launched this after hiring some of the best talent available to develop our corporate pricing strategy. Over the past 5 years, strategic pricing has driven significant incremental revenue for Equifax. By adopting a revenue management mindset, we've become more effective at pinpointing the right offer at the right time and the right price. Strategic pricing is a -- is driving greater pricing consistency and value for our customers while leading to greater value for Equifax shareholders and our bottom line. Read the rest of this transcript for free on seekingalpha.com