TransUnion (TRU) Tops Q1 EPS by 5c, Revenues Beat; Provides Scneraio-Based 2Q Outlook, Suspends FY20 Guidance

TransUnion (NYSE: TRU) reported Q1 EPS of $0.73, $0.05 better than the analyst estimate of $0.68. Revenue for the quarter came in at $688 million versus the consensus estimate of $673.61 million.

First Quarter 2020 Results

Revenue:

• 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.

“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.

“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.”

Full Year 2020 Guidance and Second Quarter 2020 Scenario-Based Outlook

Link to 2Q Scenario-Based Outlook

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

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