Taking actions in response to COVID-19 to protect our associates, customers and communitiesMaintaining a solid liquidity position, including $306 million of cash at quarter endGiven current market uncertainty, we are suspending full year 2020 guidance and providing a second quarter 2020 scenario-based outlookCHICAGO, April 28, 2020 (GLOBE NEWSWIRE) — TransUnion (NYSE: TRU) (the “Company”) today announced financial results for the quarter ended March 31, 2020.“As the world faces the unprecedented challenges of COVID-19, our primary focus is on the health and wellbeing of our associates, consumers, customers and the broader communities that we serve,” said Chris Cartwright, President and CEO. “We have successfully transitioned to a work from home model to ensure the safety of our associates and the wider population in all of our markets.”“Prior to mid-March, TransUnion was positioned to deliver strong results. As governments around the world implemented social distancing requirements, our business was negatively impacted and volumes declined sharply. Despite this, we still had sufficient momentum to deliver a good first quarter.”“In response to this global pandemic, we are proactively executing our Downturn Playbook that addresses customer engagement, necessary cost mitigation actions and investment prioritization. Our goal is to ensure that TransUnion performs as well as possible during this downturn and is fully prepared to rebound when a recovery arrives. Importantly, our balance sheet is healthy and we are well-situated, at this time, to weather the current situation.”“We extend our most heartfelt wishes to all our constituents that you remain healthy and safe,” Cartwright concluded.First Quarter 2020 ResultsRevenue:Total revenue for the quarter was $688 million, an increase of 11 percent (12 percent on a constant currency basis, 12 percent on an organic constant currency basis) compared with the first quarter of 2019.Adjusted Revenue, which removes the impact of deferred revenue purchase accounting reductions and other adjustments to revenue for our recently acquired entities, was also $688 million for the quarter, an increase of 10 percent (11 percent on a constant currency basis, 11 percent on an organic constant currency basis) compared with the first quarter of 2019.Earnings:Net income attributable to TransUnion was $70 million for the quarter, compared with $71 million for the first quarter of 2019. Diluted earnings per share was $0.37, compared with $0.37 for the first quarter of 2019. Our first quarter 2020 net income attributable to TransUnion and diluted earnings per share were significantly impacted by $30.5 million of expense (less an offsetting $7.6 million tax benefit) for the legal matter described in “Legal Proceedings Update” below.Adjusted Net Income was $141 million for the quarter, compared with $115 million for the first quarter of 2019. Adjusted Diluted Earnings per Share for the quarter was $0.73, compared with $0.60 for the first quarter of 2019.Adjusted EBITDA was $263 million for the quarter, an increase of 10 percent (11 percent on a constant currency basis, 11 percent on an organic constant currency basis) compared with the first quarter of 2019. Adjusted EBITDA margin was 38.3 percent, compared with 38.3 percent for the first quarter of 2019.First Quarter 2020 Segment ResultsU.S. Markets:U.S. Markets revenue was $422 million, an increase of 14 percent (14 percent on an organic basis) compared with the first quarter of 2019. U.S. Markets Adjusted Revenue also increased 14 percent (14 percent on an organic basis).Financial Services revenue was $230 million, an increase of 22 percent (22 percent on an organic basis) compared with the first quarter of 2019.Emerging Verticals revenue, which includes Healthcare, Insurance and all other verticals, was $192 million, an increase of 7 percent (5 percent on an organic basis) compared with the first quarter of 2019. Emerging Verticals Adjusted Revenue increased 6 percent (5 percent on an organic basis).Adjusted EBITDA was $172 million, an increase of 21 percent (21 percent on an organic basis) compared with the first quarter of 2019.International:International revenue was $158 million, an increase of 8 percent (12 percent on a constant currency basis) compared with the first quarter of 2019. International Adjusted Revenue was also $158 million, an increase of 5 percent (9 percent on a constant currency basis) compared with the first quarter of 2019 Adjusted Revenue.Canada revenue was $26 million, an increase of 15 percent (16 percent on a constant currency basis) compared with the first quarter of 2019.Latin America revenue was $24 million, a decrease of 4 percent (an increase of 6 percent on a constant currency basis) compared with the first quarter of 2019.United Kingdom revenue was $49 million, an increase of 16 percent (17 percent on a constant currency basis). Adjusted Revenue was also $49 million, an increase of 6 percent (7 percent on a constant currency basis) compared with the first quarter of 2019. Excluding the impact of the revenue from the divestment of assets held for sale, Adjusted Revenue would have increased 9 percent (10 percent on a constant currency basis) compared with the first quarter of 2019.Africa revenue was $14 million, a decrease of 5 percent (an increase of 4 percent on a constant currency basis) compared with the first quarter of 2019.India revenue was $31 million, an increase of 11 percent (14 percent on a constant currency basis) compared with the first quarter of 2019.Asia Pacific revenue was $13 million, an increase of 1 percent (up slightly on a constant currency basis) compared with the first quarter of 2019.Adjusted EBITDA was $60 million, a decrease of 7 percent (a decrease of 4 percent on a constant currency basis) compared with the first quarter of 2019.Consumer Interactive:Consumer Interactive revenue was $127 million, an increase of 3 percent compared with the first quarter of 2019.Adjusted EBITDA was $57 million, a decrease of 5 percent compared with the first quarter of 2019.Liquidity and Capital ResourcesCash and cash equivalents were $306 million at March 31, 2020 and $274 million at December 31, 2019. In addition, we have $300 million of undrawn capacity on our Senior Secured Revolving Credit Facility. For the three months ended March 31, 2020, cash provided by continuing operations was $126 million compared with $126 million in 2019. An increase in operating performance and lower interest expense in 2020 was offset by an increase in working capital in 2020. Cash used in investing activities was $26 million compared with $51 million in 2019. The decrease in cash used in investing activities was due primarily to an increase in net proceeds received from the sale of other investments, partially offset by cash used to purchase an investment in a nonconsolidated affiliate. Capital expenditures were $42 million compared with $42 million in 2019. Cash used in financing activities was $50 million compared with $60 million in 2019. The decrease in cash used in financing activities was due primarily to lower debt repayments and employee taxes paid on restricted stock units.In the first quarter of 2020, we entered into interest rate swap agreements with various counterparties that fixes our LIBOR exposure on a portion of our Senior Secured Term Loans or similar replacement debt between a range of 0.52% to 0.928%. With our existing interest rate hedge instruments, approximately 73% of our debt is fixed-rate debt.“In recent years, we’ve actively managed our portfolio of debt to ensure that we are well positioned to both run the business and continue to fund our debt obligations, even during unprecedented times like we’re currently experiencing,” said Todd Cello, Executive Vice President and Chief Financial Officer. “While the COVID-19 pandemic has created a significant amount of uncertainty in the market, TransUnion has a strong balance sheet and we will continue to take all appropriate actions to ensure that remains the case going forward.”TransUnion’s Proactive Response to COVID-19Our primary focus during the COVID-19 pandemic remains the health and safety of our associates, our customers and the wider communities in which we operate. In each of the markets that we serve, we have seamlessly moved to a work from home model, allowing us to protect our associates and the broader population while continuing to operate our businesses and provide valuable services to customers and consumers.Recognizing the uncertainty created by this pandemic, we are leveraging our Downturn Playbook to take proactive measures to address the challenges that our customers and consumers are facing and to protect our business. This includes working with our customers through close partnership and deep client engagement, bringing to market new solutions based on customer feedback and the evolving marketplace and ensuring that we are prepared to address longer-term challenges and opportunities which will arise from this situation. At the same time, we have and will continue to be disciplined in managing our cost structure and investment priorities as we adapt to the changing macro-economic landscape and the impact it is having on our business.We have also been prudent in managing our liquidity and leverage, and will continue to take appropriate actions to maximize the strength of our balance sheet and our liquidity options as we navigate through this unprecedented time.Full Year 2020 Guidance and Second Quarter 2020 Scenario-Based OutlookThe global spread and unprecedented impact of COVID-19 is complex and rapidly-evolving. Given the considerable uncertainty across all our geographic and vertical markets, at this time we have suspended full year guidance. We will continue to assess this decision, and intend to reinstate full year guidance at the appropriate time once we have sufficient visibility.We are also unable to provide second quarter 2020 guidance. Instead, we believe that providing a scenario-based outlook which contemplates a base case, an upside case and a downside case is more appropriate at this time. Under this scenario-based approach, our base case assumes the continuation of current market trends through June 2020, our upside case assumes an earlier, albeit slow, start to the recovery in May or June 2020 and our downside case assumes a meaningful deterioration in current trends. For more details on each scenario, including the expected financial outcome and balance sheet implications, please see our presentation materials which are available on the TransUnion Investor Relations website at (www.transunion.com/tru).Legal Proceedings UpdateOn February 27, 2020, the United States Court of Appeals for the Ninth Circuit affirmed in part and reversed and vacated in part the trial court’s judgment in Ramirez v. Trans Union LLC, reducing the trial court’s punitive damages award from approximately $52.0 million to approximately $32.0 million. On April 8, 2020, the Ninth Circuit denied our petition for rehearing en banc. We recorded an estimated liability at March 31, 2020, in an amount equal to the portion of the punitive damages award affirmed by the Ninth Circuit and a partially offsetting insurance receivable, with expense of $30.5 million recorded in selling, general and administrative expense, less a $7.6 million tax benefit recorded in provision for income taxes. See our Quarterly Report on Form 10-Q for the period ended March 31, 2020, for additional information. There was no impact on Adjusted EBITDA or Adjusted Net Income as the net impact of this matter was added back to these non-GAAP financial measures as presented in the tables below.Earnings Webcast DetailsIn 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 TransUnionTransUnion is a leading global information and insights company that strives to make trust possible between businesses and consumers, working to ensure that each person is reliably and safely represented in the marketplace. The Company provides consumer reports, actionable insights and analytics such as credit and other scores, 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 WebsiteInvestors 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 MeasuresThis 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 certain accelerated technology investment 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 certain accelerated technology investment expenses, plus (less) certain other expenses (income), plus amortization of certain intangible assets, plus or minus the related changes in provision for income taxes. 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 5.Forward-Looking StatementsThis 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. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plans and strategies. 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; the effects of the COVID-19 pandemic; the timing of the recovery from the COVID-19 pandemic; 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, 2019, 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.
TRANSUNION AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(in millions, except per share data)
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Consolidated Statements of Income (Unaudited)
(in millions, except per share data)As a result of displaying amounts in millions, rounding differences may exist in the table above.
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Consolidated Statements of Cash Flows (Unaudited)
(in millions)As a result of displaying amounts in millions, rounding differences may exist in the table above.
SCHEDULE 1
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Revenue, Adjusted Revenue, and Adjusted EBITDA growth rates as Reported, CC, Inorganic, Organic and Organic CC (Unaudited)nm: not meaningful
SCHEDULE 2
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Consolidated and Segment Revenue, Adjusted Revenue, Adjusted EBITDA, and Adjusted EBITDA Margins (Unaudited)
(dollars in millions)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.
As a result of displaying amounts in millions, rounding differences may exist in the tables above and footnotes below.
SCHEDULE 3
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Adjusted Net Income and Adjusted Earnings Per Share (Unaudited)
(in millions, except per share data)As a result of displaying amounts in millions, rounding differences may exist in the table above and footnotes below.
SCHEDULE 4
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Effective Tax Rate and Adjusted Effective Tax Rate (Unaudited)
(dollars in millions)As a result of displaying amounts in millions, rounding differences may exist in the table above.
SCHEDULE 5
TRANSUNION AND SUBSIDIARIES
Segment Depreciation and Amortization (Unaudited)
(in millions)As a result of displaying amounts in millions, rounding differences may exist in the table above.
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