TransUnion (TRU) Tops Q4 EPS by 3c, Revenues Beat; Offers Q1 & FY19 EPS/Revenue Guidance Below Consensus

TransUnion (NYSE: TRU) reported Q4 EPS of $0.66, $0.03 better than the analyst estimate of $0.63. Revenue for the quarter came in at $613 million versus the consensus estimate of $621.67 million.

Revenue:

• Total revenue for the quarter was $613 million, an increase of 21 percent compared with the fourth quarter of 2017 (22 percent on a constant currency basis, 11 percent on an organic constant currency basis).
• Adjusted revenue, which removes the impact of deferred revenue purchase accounting reductions and other adjustments to revenue for our recently acquired entities, was $624 million for the quarter, an increase of 23 percent compared with the fourth quarter of 2017 (25 percent on a constant currency basis, 11 percent on an organic constant currency basis).

Earnings:

• Net income attributable to TransUnion was $102 million for the fourth quarter, compared with $245 million in the fourth quarter of 2017. Diluted earnings per share was $0.53 for the quarter, compared with $1.29 in the fourth quarter of 2017. Our fourth quarter 2017 net income attributable to TransUnion and diluted earnings per share were significantly impacted by estimated tax provision benefits from the Tax Cuts and Jobs Act.
• Adjusted Net Income was $126 million, compared with $95 million in the fourth quarter of 2017. Adjusted Diluted Earnings per Share was $0.66, compared with $0.50 in the fourth quarter of 2017.
• Adjusted EBITDA for the quarter was $249 million, an increase of 27 percent compared with the fourth quarter of 2017 (29 percent on a constant currency basis). Adjusted EBITDA margin for the quarter was 39.9 percent, compared with 38.8 percent in the fourth quarter of 2017.

“TransUnion delivered double-digit Adjusted Revenue, Adjusted EBITDA and Adjusted EPS growth in the fourth quarter and full year 2018, capping a fifth consecutive year of double-digit growth on each of these metrics,” said Jim Peck, President and CEO. “2018 was not just another year of strong performance, but also a pivotal year of investment in our future and the long-term growth of TransUnion. We made four outstanding strategic acquisitions, highlighted by the two largest purchases in our history: Callcredit and iovation. At the same time, we continue to aggressively invest in our best internal projects like CreditVision, CreditVision Link, CreditView, IDVision with iovation, Prama and many more. Taken together, I am more confident than I’ve ever been in our long-term prospects. Equally important, the work we do is driving opportunity for people, businesses and economies around the world.”

“During the quarter, we also made a debt prepayment of $60 million and executed a hedge to further limit our balance sheet exposure to rising interest rates,” he concluded.

GUIDANCE:

TransUnion sees FY2019 EPS of $2.57-$2.63, versus the consensus of $2.79. TransUnion sees FY2019 revenue of $2.59-2.61 billion, versus the consensus of $2.66 billion.

TransUnion sees FY2019 EPS of $0.58-$0.59, versus the consensus of $0.63. TransUnion sees FY2019 revenue of $614-619 billion, versus the consensus of $639.56 billion.

2019 Full Year Outlook

For the full year of 2019, Adjusted Revenue is expected to be between $2.59 billion and $2.61 billion, an increase of 10.5 to 11.5 percent compared with 2018. Adjusted EBITDA is expected to be between $1.017 billion and $1.032 billion, an increase of 11 to 13 percent. Adjusted Diluted Earnings per Share is expected to be between $2.57 and $2.63, an increase of 3 to 5 percent. Adjusted Diluted Earnings per Share guidance includes an approximate $0.04 headwind from unfavorable foreign exchange rates and an approximate $0.18 per share headwind from the full year impact of higher interest expense related to the additional debt for acquisitions completed in June 2018 and higher LIBOR rates.

The Adjusted Revenue guidance includes approximately 5 points of growth from acquisitions that closed in the prior year. Adjusted Revenue and Adjusted EBITDA include approximately 100 basis points of drag 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 First Quarter Outlook

For the first quarter of 2019, Adjusted Revenue is expected to be between $614 million and $619 million, an increase of 14 to 15 percent compared with the fourth quarter of 2018. Adjusted EBITDA is expected to be between $233 million and $236 million, an increase of 15 to 17 percent. Adjusted Diluted Earnings per Share is expected to be between $0.58 and $0.59, an increase of 2 to 4 percent. Adjusted Diluted Earnings per share is negatively impacted by approximately $0.02 from unfavorable foreign exchange rates and approximately $0.09 from higher interest expense related to additional debt for acquisitions completed in June 2018 and higher LIBOR rates.

The first quarter Adjusted Revenue guidance includes approximately 12 points of growth from acquisitions that closed in the prior year. Foreign exchange rates are driving an approximate 300 basis points of drag on Adjusted Revenue and Adjusted EBITDA. Our prior year results included approximately $5 million of incremental monitoring revenue due to a breach at a competitor, so this negatively impacts our organic constant currency Adjusted Revenue growth by approximately 100 basis points.

For earnings history and earnings-related data on TransUnion (TRU) click here.

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