TransUnion Announces Third Quarter 2022 Results
•Grew total revenues by 26 percent (5 percent organic constant currency revenue growth excluding mortgage), driven by strength in International and U.S. Financial Services.
•Delivered strong progress on acquisition integrations, with stronger-than-expected revenue growth and synergy realization as well as a growing sales pipeline.
•Now expecting 2022 organic revenue growth excluding mortgage to be approximately 7 percent with strong performance in our B2B businesses; adjusting guidance to reflect greater foreign currency headwinds as well as expected moderating growth in our U.S. Markets business in the fourth quarter.
CHICAGO, October 25, 2022 - TransUnion (NYSE: TRU) (the “Company”) today announced financial results for the quarter ended September 30, 2022.
Third Quarter 2022 Results
Revenue:
•Total revenue for the quarter was $938 million, an increase of 26 percent (29 percent on a constant currency basis and 1 percent on an organic constant currency basis), compared with the third quarter of 2021.
Earnings:
•Net income attributable to TransUnion was $79 million for the quarter, compared with $114 million for the third quarter of 2021. Diluted earnings per share was $0.41, compared with $0.59 in the third quarter of 2021. Net income attributable to TransUnion margin was 8.4 percent, compared with 15.4 percent in the third quarter of 2021.
•Adjusted Net Income was $180 million for the quarter, compared with $176 million for the third quarter of 2021. Adjusted Diluted Earnings per Share for the quarter was $0.93, compared with $0.91 in the third quarter of 2021.
•Adjusted EBITDA was $341 million for the quarter, an increase of 13 percent (15 percent on a constant currency basis, a decrease of 4 percent on an organic constant currency basis) compared with the third quarter of 2021. Adjusted EBITDA margin was 36.3 percent, compared with 40.6 percent in the third quarter of 2021.
“TransUnion delivered another solid quarter against a slowing macroeconomic backdrop,” said Chris Cartwright, President and CEO. “Our portfolio transformation continues to pay dividends, as we drove market-leading organic growth in our U.S. Financial Services business, revenue and bookings outperformance in our recent acquisitions, and robust results internationally led by India, Asia Pacific, Latin America and Africa.”
“We continue to expect a healthy 2022 with approximately 7 percent organic revenue growth excluding mortgage, but are adjusting our outlook to reflect greater foreign exchange headwinds as well as moderated growth expectations in the fourth quarter. In U.S. mortgage, we continue to anticipate 30 to 35 percent revenue declines due to expected 40 to 45 percent inquiry declines. We also expect to deliver strong earnings growth, driven by acquisition synergies and cost discipline.”
“While macro uncertainty is leading to some caution in the markets we serve, our customers and the consumer remain healthy. We are better positioned than ever to partner with our customers, delivering best-in-class solutions to navigate this dynamic environment. We continue to believe in our ability to achieve the 2025 long-term financial targets laid out at our March 2022 Investor Day.”
Third Quarter 2022 Segment Results
U.S. Markets:
U.S. Markets revenue was $621 million, an increase of 38 percent (a decrease of 2 percent on an organic basis) compared with the third quarter of 2021.
•Financial Services revenue, which includes Argus Information and Advisory Services, Inc. and Commerce Signals, Inc. (collectively “Argus”), was $291 million, an increase of 5 percent (a decrease of 4 percent on an organic basis) compared with the third quarter of 2021.
•Emerging Verticals revenue, which includes Neustar, Inc. (“Neustar”), Insurance and all other verticals, was $330 million, an increase of 91 percent (1 percent on an organic basis) compared with the third quarter of 2021.
Adjusted EBITDA was $218 million, an increase of 18 percent (a decrease of 9 percent on an organic basis) compared with the third quarter of 2021.
International:
International revenue was $189 million, an increase of 6 percent (16 percent on a constant currency basis) compared with the third quarter of 2021.
•Canada revenue was $32 million, an increase of 6 percent (10 percent on a constant currency basis) compared with the third quarter of 2021.
•Latin America revenue was $29 million, an increase of 7 percent (13 percent on a constant currency basis) compared with the third quarter of 2021.
•United Kingdom revenue was $49 million, a decrease of 11 percent (an increase of 4 percent on a constant currency basis) compared with the third quarter of 2021.
•Africa revenue was $16 million, an increase of 3 percent (18 percent on a constant currency basis) compared with the third quarter of 2021.
•India revenue was $44 million, an increase of 29 percent (39 percent on a constant currency basis) compared with the third quarter of 2021.
•Asia Pacific revenue was $20 million, an increase of 20 percent (24 percent on a constant currency basis) compared with the third quarter of 2021.
Adjusted EBITDA was $84 million, an increase of 8 percent (18 percent on a constant currency basis) compared with the third quarter of 2021.
Consumer Interactive:
Consumer Interactive revenue, which includes Sontiq, Inc. (“Sontiq”), was $147 million, an increase of 9 percent (a decrease of 9 percent on an organic basis) compared with the third quarter of 2021.
Adjusted EBITDA was $73 million, an increase of 5 percent (a decrease of 6 percent on an organic basis) compared with the third quarter of 2021.
Liquidity and Capital Resources
Cash and cash equivalents were $596 million at September 30, 2022 and $1,842 million at December 31, 2021. In addition, we had $300 million of undrawn capacity on our Senior Secured Revolving Credit Facility at September 30, 2022. In January 2022, we prepaid $400 million of debt. In April 2022, we paid $508 million for the acquisition of Verisk Financial Services (“VF”), the financial services business unit of Verisk Analytics, Inc., and also paid $355 million of taxes due on the gain of the divestiture of our Healthcare business, both funded with cash on hand.
For the nine months ended September 30, 2022, cash provided by operating activities of continuing operations was $71 million compared with cash provided by operating activities of continuing operations of $603 million in 2021. The decrease in cash provided by operating activities of continuing operations for the nine month period was due primarily to payments made for taxes due on the gain on the divestiture of our Healthcare business made in the second quarter, an
increase in cash payments for accrued incentive and other compensation made in the first quarter of 2022 compared to the first quarter of 2021, and an increase in interest expense payments for the nine month period. Cash used in investing activities of continuing operations was $735 million compared with $217 million in 2021. The increase in cash used in investing activities of continuing operations was due primarily to payments made for the acquisition of VF and an increase in capital expenditures. Capital expenditures were $193 million compared with $149 million in 2021. Cash used in financing activities of continuing operations was $564 million compared with $232 million in 2021. The increase in cash used in financing activities of continuing operations was due primarily to an increase in debt prepayments.
Fourth Quarter and Full Year 2022 Outlook
Our guidance is based on a number of assumptions that are subject to change, many of which are outside of the control of the Company, including general macroeconomic conditions and the potential impact of the global COVID-19 pandemic. There are numerous evolving factors that we may not be able to accurately predict. There can be no assurance that the Company will achieve the results expressed by this guidance.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended
December 31, 2022 | | Twelve Months Ended
December 31, 2022 |
| (in millions, except per share data) | | Low | | High | | Low | | High |
| Revenue, as reported | | $ | 896 | | | $ | 916 | | | $ | 3,704 | | | $ | 3,724 | |
Revenue growth1: | | | | | | | | |
| As reported | | 13 | % | | 16 | % | | 25 | % | | 26 | % |
Constant currency1, 2 | | 16 | % | | 19 | % | | 27 | % | | 28 | % |
Organic constant currency1, 3 | | (3) | % | | — | % | | 3 | % | | 3 | % |
| | | | | | | | |
| Net income attributable to TransUnion | | $ | 54 | | | $ | 65 | | | $ | 277 | | | $ | 288 | |
| Net income attributable to TransUnion growth | | (95) | % | | (94) | % | | (80) | % | | (79) | % |
| Net income attributable to TransUnion margin | | 6.0 | % | | 7.1 | % | | 7.5 | % | | 7.7 | % |
| | | | | | | | |
| Diluted Earnings per Share | | $ | 0.28 | | | $ | 0.34 | | | $ | 1.43 | | | $ | 1.49 | |
| Diluted Earnings per Share growth | | (95) | % | | (94) | % | | (80) | % | | (79) | % |
| | | | | | | | |
Adjusted EBITDA, as reported5 | | $ | 318 | | | $ | 333 | | | $ | 1,343 | | | $ | 1,358 | |
Adjusted EBITDA growth, as reported4 | | 13 | % | | 18 | % | | 16 | % | | 17 | % |
| Adjusted EBITDA margin | | 35.5 | % | | 36.3 | % | | 36.3 | % | | 36.5 | % |
| | | | | | | | |
Adjusted Diluted Earnings per Share5 | | $ | 0.80 | | | $ | 0.86 | | | $ | 3.63 | | | $ | 3.69 | |
| Adjusted Diluted Earnings per Share growth | | (2) | % | | 6 | % | | 6 | % | | 7 | % |
(1)Additional revenue growth assumptions:
a.The impact of changing foreign currency exchange rates is expected to have approximately 3 points of headwind for Q4 2022 and 2 point of headwind for FY 2022.
b.The impact of recent acquisitions is expected to have approximately 19 points of benefit for Q4 2022 and 24 points of benefit for FY 2022.
c.The impact of mortgage is expected to be approximately 4 points of headwind for Q4 2022 and 4 points for FY 2022. These impacts are calculated by removing the U.S. mortgage revenue from both the current year and prior year periods.
(2)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.
(3)Organic constant currency growth rates are constant currency growth excluding inorganic growth. Inorganic growth represents growth attributable to the first twelve months of activity for recent business acquisitions.
(4) Additional Adjusted EBITDA assumptions:
a.The impact of changing foreign currency exchange rates is expected to have approximately 4 points of headwind for Q4 2022 and 2 point of headwind for FY 2022.
(5)For a reconciliation of the above non-GAAP financial measures to the most directly comparable GAAP financial measures, refer to Schedule 6 of this Earnings Release.
Earnings Webcast Details
In conjunction with this release, TransUnion will host a conference call and webcast today at 8:30 a.m. Central Time to discuss the business results for the quarter and certain forward-looking information. This session and the accompanying presentation materials 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 global information and insights company that makes trust possible in the modern economy. We do this by providing a comprehensive picture of each person so they can be reliably and safely represented in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call this Information for Good.
A leading presence in more than 30 countries across five continents, TransUnion provides solutions that help create economic opportunity, great experiences and personal empowerment for hundreds of millions of people.
http://www.transunion.com/business
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 EBITDA, Adjusted EBITDA Margin, Adjusted Income Tax Expense, 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 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 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 EBITDA as net income (loss) attributable to TransUnion, less income from discontinued operations, net of tax, plus net interest expense, plus (less) provision (benefit) for income taxes, plus depreciation and amortization, plus stock-based compensation, plus mergers, acquisitions, divestitures and business optimization-related expenses, plus certain accelerated technology investment expenses to migrate to the cloud, plus (less) certain other expenses (income). We define Adjusted EBITDA Margin for our segments as the segment Adjusted EBITDA divided by segment gross revenue and define Consolidated Adjusted EBITDA margin as consolidated Adjusted EBITDA divided by total revenue as reported. We define Adjusted Net Income as net income (loss) attributable to TransUnion, less income from discontinued operations, net of tax, plus stock-based compensation, plus mergers, acquisitions, divestitures and business optimization-related expenses, plus certain accelerated technology investment expenses, plus (less) certain other expenses (income), plus amortization of certain intangible assets, plus or minus the changes in provision for income taxes. We define Adjusted Income Tax Expense as our provision for income taxes, plus or minus the tax impact on the adjustment included in Adjusted Net Income, plus or minus the impact of excess tax benefits for share compensation, plus or minus other items that relate to prior periods such as valuation allowance changes, deferred tax rate and return to provision adjustments, and other unusual items that are included in our 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 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. Forward-looking statements include information concerning possible or assumed future results of operations, including our guidance and 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, or that could materially affect our financial results or such forward-looking statements include:
•macroeconomic effects including the impact of inflation, and industry trends and adverse developments in the debt, consumer credit and financial services markets;
•the effects of the COVID-19 pandemic, including the prevalence and severity of the variants;
•the war in Ukraine and escalating geopolitical tensions as a result of Russia’s invasion of Ukraine;
•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 acquire businesses, successfully secure financing for our acquisitions, timely consummate our acquisitions, successfully integrate the operations of our acquisitions, control the costs of integrating our acquisitions 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; and
•our reliance on key management personnel.
There may be other factors, many of which are beyond our control, that may cause our actual results to differ materially from the forward-looking statements, including factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021, and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K filed with the Securities and Exchange Commission. You should evaluate all forward-looking statements made in this report in the context of these risks and uncertainties.
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.
For More Information
Telephone: 312.985.2860
TRANSUNION AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(in millions, except per share data)
| | | | | | | | | | | | | | |
| | September 30,
2022 | | December 31,
2021 |
| Assets | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | $ | 596.1 | | | $ | 1,842.4 | |
| Trade accounts receivable, net of allowance of $10.9 and $10.7 | | 634.8 | | | 558.0 | |
| Other current assets | | 286.5 | | | 231.6 | |
| Current assets of discontinued operations | | 21.4 | | | — | |
| Total current assets | | $ | 1,538.8 | | | $ | 2,632.0 | |
| Property, plant and equipment, net of accumulated depreciation and amortization of $684.7 and $625.4 | | 212.0 | | | 247.7 | |
| Goodwill | | 5,513.4 | | | 5,525.7 | |
| Other intangibles, net of accumulated amortization of $2,144.4 and $1,908.9 | | 3,701.6 | | | 3,770.6 | |
| Other assets | | 713.3 | | | 459.0 | |
| Other assets of discontinued operations | | 125.0 | | | — | |
| Total assets | | $ | 11,804.1 | | | $ | 12,635.0 | |
| Liabilities and stockholders’ equity | | | | |
| Current liabilities: | | | | |
| Trade accounts payable | | $ | 257.3 | | | $ | 270.2 | |
| Short-term debt and current portion of long-term debt | | 114.6 | | | 114.6 | |
| Other current liabilities | | 506.9 | | | 972.2 | |
| Current liabilities of discontinued operations | | 11.1 | | | — | |
| Total current liabilities | | $ | 889.9 | | | $ | 1,357.0 | |
| Long-term debt | | 5,778.9 | | | 6,251.3 | |
| Deferred taxes | | 801.9 | | | 787.6 | |
| Other liabilities | | 179.6 | | | 232.9 | |
| Other liabilities of discontinued operations | | 0.1 | | | — | |
| Total liabilities | | $ | 7,650.4 | | | $ | 8,628.8 | |
| Stockholders’ equity: | | | | |
| Common stock, $0.01 par value; 1.0 billion shares authorized at September 30, 2022 and December 31, 2021, 198.6 million and 197.4 million shares issued at September 30, 2022 and December 31, 2021, respectively, and 192.7 million shares and 191.8 million shares outstanding as of September 30, 2022 and December 31, 2021, respectively | | 2.0 | | | 2.0 | |
| Additional paid-in capital | | 2,270.0 | | | 2,188.9 | |
| Treasury stock at cost; 5.9 million and 5.6 million shares at September 30, 2022 and December 31, 2021, respectively | | (282.0) | | | (252.0) | |
| Retained earnings | | 2,420.9 | | | 2,254.6 | |
| Accumulated other comprehensive loss | | (357.4) | | | (285.4) | |
| Total TransUnion stockholders’ equity | | $ | 4,053.5 | | | $ | 3,908.1 | |
| Noncontrolling interests | | 100.2 | | | 98.1 | |
| Total stockholders’ equity | | $ | 4,153.7 | | | $ | 4,006.2 | |
| Total liabilities and stockholders’ equity | | $ | 11,804.1 | | | $ | 12,635.0 | |
TRANSUNION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
(in millions, except per share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| Revenue | | $ | 938.2 | | | $ | 743.4 | | | $ | 2,807.8 | | | $ | 2,170.4 | |
| Operating expenses | | | | | | | | |
| Cost of services (exclusive of depreciation and amortization below) | | 305.6 | | | 243.1 | | | 911.7 | | | 704.6 | |
| Selling, general and administrative | | 333.6 | | | 239.6 | | | 1,020.1 | | | 658.5 | |
| Depreciation and amortization | | 129.6 | | | 90.9 | | | 389.0 | | | 273.6 | |
| Total operating expenses | | $ | 768.7 | | | $ | 573.7 | | | $ | 2,320.8 | | | $ | 1,636.7 | |
| Operating income | | $ | 169.5 | | | $ | 169.7 | | | $ | 487.0 | | | $ | 533.7 | |
| Non-operating income and (expense) | | | | | | | | |
| Interest expense | | (61.3) | | | (25.7) | | | (163.4) | | | (77.1) | |
| Interest income | | 1.1 | | | 0.8 | | | 3.1 | | | 2.4 | |
| Earnings from equity method investments | | 3.5 | | | 2.9 | | | 9.7 | | | 8.6 | |
| Other income and (expense), net | | (2.0) | | | (18.7) | | | (20.2) | | | (16.9) | |
| Total non-operating income and (expense) | | $ | (58.7) | | | $ | (40.7) | | | $ | (170.9) | | | $ | (83.0) | |
| Income from continuing operations before income taxes | | 110.8 | | | 128.9 | | | 316.1 | | | 450.7 | |
| Provision for income taxes | | (30.6) | | | (32.3) | | | (84.1) | | | (114.6) | |
| Income from continuing operations | | $ | 80.3 | | | $ | 96.7 | | | $ | 232.0 | | | $ | 336.1 | |
| Discontinued operations, net of tax | | 2.4 | | | 21.5 | | | 2.3 | | | 45.6 | |
| Net income | | $ | 82.7 | | | $ | 118.2 | | | $ | 234.3 | | | $ | 381.7 | |
| Less: net income attributable to the noncontrolling interests | | (3.5) | | | (4.0) | | | (11.3) | | | (12.0) | |
| Net income attributable to TransUnion | | $ | 79.2 | | | $ | 114.2 | | | $ | 223.0 | | | $ | 369.7 | |
| | | | | | | | |
| Income from continuing operations | | $ | 80.3 | | | $ | 96.7 | | | $ | 232.0 | | | $ | 336.1 | |
| Less: income from continuing operations attributable to noncontrolling interests | | (3.5) | | | (4.0) | | | (11.3) | | | (12.0) | |
| Income from continuing operations attributable to TransUnion | | 76.8 | | | 92.7 | | | 220.7 | | | 324.1 | |
| Discontinued operations, net of tax | | 2.4 | | | 21.5 | | | 2.3 | | | 45.6 | |
| Net income attributable to TransUnion | | $ | 79.2 | | | $ | 114.2 | | | $ | 223.0 | | | $ | 369.7 | |
| | | | | | | | |
| Basic earnings per common share from: | | | | | | | | |
| Income from continuing operations attributable to TransUnion | | $ | 0.40 | | | $ | 0.48 | | | $ | 1.15 | | | $ | 1.69 | |
| Discontinued operations, net of tax | | 0.01 | | | 0.11 | | | 0.01 | | | 0.24 | |
| Net Income attributable to TransUnion | | $ | 0.41 | | | $ | 0.60 | | | $ | 1.16 | | | $ | 1.93 | |
| Diluted earnings per common share from: | | | | | | | | |
| Income from continuing operations attributable to TransUnion | | $ | 0.40 | | | $ | 0.48 | | | $ | 1.14 | | | $ | 1.68 | |
| Discontinued operations, net of tax | | 0.01 | | | 0.11 | | | 0.01 | | | 0.24 | |
| Net Income attributable to TransUnion | | $ | 0.41 | | | $ | 0.59 | | | $ | 1.15 | | | $ | 1.92 | |
| Weighted-average shares outstanding: | | | | | | | | |
| Basic | | 192.6 | | | 191.6 | | | 192.4 | | | 191.3 | |
| Diluted | | 193.2 | | | 193.1 | | | 193.1 | | | 192.9 | |
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, |
| | 2022 | | 2021 |
| Cash flows from operating activities: | | | | |
| Net income | | $ | 234.3 | | | $ | 381.7 | |
| Less: Discontinued operations, net of tax | | (2.3) | | | (45.6) | |
| Income from continuing operations | | $ | 232.0 | | | $ | 336.1 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | |
| Depreciation and amortization | | 389.0 | | | 273.6 | |
| Loss on repayment of loans | | 6.5 | | | 0.5 | |
| Deferred taxes | | (60.7) | | | 10.0 | |
| Stock-based compensation | | 62.0 | | | 49.0 | |
| Provision for losses on trade accounts receivable | | 4.3 | | | (1.4) | |
| Other | | 10.6 | | | 0.9 | |
| Changes in assets and liabilities: | | | | |
| Trade accounts receivable | | (72.7) | | | (61.7) | |
| Other current and long-term assets | | (31.0) | | | (39.5) | |
| Trade accounts payable | | (20.4) | | | 32.4 | |
| Other current and long-term liabilities | | (448.8) | | | 3.3 | |
| Cash provided by operating activities of continuing operations | | $ | 70.8 | | | $ | 603.2 | |
| Cash provided by operating activities of discontinued operations | | 4.6 | | | 57.0 | |
| Cash provided by operating activities | | $ | 75.4 | | | $ | 660.2 | |
| Cash flows from investing activities: | | | | |
| Capital expenditures | | (192.5) | | | (148.7) | |
| Proceeds from sale/maturities of other investments | | 85.3 | | | 27.8 | |
| Purchases of other investments | | (103.9) | | | (53.7) | |
| Investments in consolidated affiliates, net of cash acquired | | (510.4) | | | — | |
| Investments in nonconsolidated affiliates and purchase of convertible notes | | (14.8) | | | (41.6) | |
| Other | | 1.6 | | | (0.5) | |
| Cash used in investing activities of continuing operations | | $ | (734.7) | | | $ | (216.7) | |
| Cash (used in) provided by investing activities of discontinued operations | | (1.9) | | | 8.7 | |
| Cash used in investing activities | | $ | (736.6) | | | $ | (208.0) | |
| Cash flows from financing activities: | | | | |
| Repayments of debt | | (486.0) | | | (127.5) | |
| Proceeds from issuance of common stock and exercise of stock options | | 18.7 | | | 21.2 | |
| Dividends to shareholders | | (57.5) | | | (51.5) | |
| Employee taxes paid on restricted stock units recorded as treasury stock | | (30.0) | | | (34.8) | |
| Payment of contingent consideration | | (2.8) | | | (32.4) | |
| Distributions to noncontrolling interests | | (6.3) | | | (6.5) | |
| Cash used in financing activities of continuing operations | | $ | (563.9) | | | $ | (231.5) | |
| Cash used in financing activities of discontinued operations | | — | | | — | |
| Cash used in financing activities | | $ | (563.9) | | | $ | (231.5) | |
| Effect of exchange rate changes on cash and cash equivalents | | (21.2) | | | (4.8) | |
| Net change in cash and cash equivalents | | $ | (1,246.3) | | | $ | 215.9 | |
| Cash and cash equivalents, beginning of period | | 1,842.4 | | | 492.7 | |
| Cash and cash equivalents, end of period | | $ | 596.1 | | | $ | 708.6 | |
As a result of displaying amounts in millions, rounding differences may exist in the table above.
SCHEDULE 1
TRANSUNION AND SUBSIDIARIES
Revenue and Adjusted EBITDA growth rates as Reported, CC, Inorganic, Organic and Organic CC
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended September 30, 2022 compared with the Three Months Ended September 30, 2021 | | |
| | Reported | | CC Growth(1) | | Inorganic(2) | | Organic Growth(3) | | Organic CC Growth(4) | | | | | | | | | | |
| Revenue: | | | | | | | | | | | | | | | | | | | | |
| Consolidated | | 26.2 | % | | 28.6 | % | | 27.5 | % | | (1.2) | % | | 1.1 | % | | | | | | | | | | |
| U.S. Markets | | 38.0 | % | | 38.0 | % | | 39.8 | % | | (1.8) | % | | (1.8) | % | | | | | | | | | | |
| Financial Services | | 5.0 | % | | 5.0 | % | | 8.6 | % | | (3.6) | % | | (3.6) | % | | | | | | | | | | |
| Emerging Verticals | | 91.2 | % | | 91.2 | % | | 90.2 | % | | 1.0 | % | | 1.0 | % | | | | | | | | | | |
| International | | 6.3 | % | | 16.1 | % | | — | % | | 6.3 | % | | 16.1 | % | | | | | | | | | | |
| Canada | | 5.9 | % | | 9.7 | % | | — | % | | 5.9 | % | | 9.7 | % | | | | | | | | | | |
| Latin America | | 7.1 | % | | 13.3 | % | | — | % | | 7.1 | % | | 13.3 | % | | | | | | | | | | |
| United Kingdom | | (11.2) | % | | 3.9 | % | | — | % | | (11.2) | % | | 3.9 | % | | | | | | | | | | |
| Africa | | 2.8 | % | | 17.9 | % | | — | % | | 2.8 | % | | 17.9 | % | | | | | | | | | | |
| India | | 28.7 | % | | 38.7 | % | | — | % | | 28.7 | % | | 38.7 | % | | | | | | | | | | |
| Asia Pacific | | 20.0 | % | | 23.7 | % | | — | % | | 20.0 | % | | 23.7 | % | | | | | | | | | | |
| Consumer Interactive | | 9.1 | % | | 9.1 | % | | 18.3 | % | | (9.2) | % | | (9.2) | % | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Adjusted EBITDA: | | | | | | | | | | | | | | | | | | | | |
| Consolidated | | 12.8 | % | | 15.4 | % | | 19.0 | % | | (6.2) | % | | (3.6) | % | | | | | | | | | | |
| U.S. Markets | | 17.6 | % | | 17.6 | % | | 26.7 | % | | (9.1) | % | | (9.1) | % | | | | | | | | | | |
| International | | 7.5 | % | | 17.6 | % | | — | % | | 7.5 | % | | 17.6 | % | | | | | | | | | | |
| Consumer Interactive | | 5.2 | % | | 5.2 | % | | 11.2 | % | | (5.9) | % | | (5.9) | % | | | | | | | | | | |
SCHEDULE 1
TRANSUNION AND SUBSIDIARIES
Revenue and Adjusted EBITDA growth rates as Reported, CC, Inorganic, Organic and Organic CC
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, 2022 compared with the Nine Months Ended September 30, 2021 | | |
| | Reported | | CC Growth(1) | | Inorganic(2) | | Organic Growth(3) | | Organic CC Growth(4) | | | | | | | | | | |
| Revenue: | | | | | | | | | | | | | | | | | | | | |
| Consolidated | | 29.4 | % | | 30.9 | % | | 26.4 | % | | 3.0 | % | | 4.5 | % | | | | | | | | | | |
| U.S. Markets | | 41.5 | % | | 41.5 | % | | 38.3 | % | | 3.2 | % | | 3.2 | % | | | | | | | | | | |
| Financial Services | | 7.1 | % | | 7.1 | % | | 5.7 | % | | 1.4 | % | | 1.4 | % | | | | | | | | | | |
| Emerging Verticals | | 97.4 | % | | 97.4 | % | | 91.3 | % | | 6.1 | % | | 6.1 | % | | | | | | | | | | |
| International | | 9.8 | % | | 16.1 | % | | — | % | | 9.8 | % | | 16.1 | % | | | | | | | | | | |
| Canada | | 1.3 | % | | 3.8 | % | | — | % | | 1.3 | % | | 3.8 | % | | | | | | | | | | |
| Latin America | | 11.1 | % | | 14.8 | % | | — | % | | 11.1 | % | | 14.8 | % | | | | | | | | | | |
| United Kingdom | | (2.4) | % | | 7.2 | % | | — | % | | (2.4) | % | | 7.2 | % | | | | | | | | | | |
| Africa | | 4.3 | % | | 13.2 | % | | — | % | | 4.3 | % | | 13.2 | % | | | | | | | | | | |
| India | | 34.6 | % | | 41.7 | % | | — | % | | 34.6 | % | | 41.7 | % | | | | | | | | | | |
| Asia Pacific | | 20.5 | % | | 23.5 | % | | — | % | | 20.5 | % | | 23.5 | % | | | | | | | | | | |
| Consumer Interactive | | 10.5 | % | | 10.5 | % | | 17.6 | % | | (7.1) | % | | (7.1) | % | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Adjusted EBITDA: | | | | | | | | | | | | | | | | | | | | |
| Consolidated | | 17.2 | % | | 18.8 | % | | 17.1 | % | | 0.1 | % | | 1.7 | % | | | | | | | | | | |
| U.S. Markets | | 21.9 | % | | 21.9 | % | | 23.2 | % | | (1.3) | % | | (1.3) | % | | | | | | | | | | |
| International | | 11.4 | % | | 17.9 | % | | — | % | | 11.4 | % | | 17.9 | % | | | | | | | | | | |
| Consumer Interactive | | 8.9 | % | | 8.9 | % | | 11.4 | % | | (2.5) | % | | (2.5) | % | | | | | | | | | | |
(1)Constant Currency (“CC”) 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.
(2)Inorganic growth rate represents growth attributable to the first twelve months of activity for recent business acquisitions.
(3)Organic growth rate is the reported growth rate less the inorganic growth rate.
(4)Organic CC growth rate is the CC growth rate less inorganic growth rate.
SCHEDULE 2
TRANSUNION AND SUBSIDIARIES
Consolidated and Segment Revenue, Adjusted EBITDA, and Adjusted EBITDA Margins (Unaudited)
(dollars in millions)
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| Revenue: | | | | | | | |
| U.S. Markets gross revenue | | | | | | | |
| Financial Services | $ | 291.4 | | | $ | 277.6 | | | $ | 869.1 | | | $ | 811.4 | |
| Emerging Verticals | 329.7 | | | 172.5 | | | 985.4 | | | 499.1 | |
| U.S. Markets gross revenue | $ | 621.1 | | | $ | 450.1 | | | $ | 1,854.4 | | | $ | 1,310.5 | |
| | | | | | | |
| International gross revenue | | | | | | | |
| Canada | $ | 32.4 | | | $ | 30.6 | | | $ | 96.2 | | | $ | 95.0 | |
| Latin America | 28.6 | | | 26.7 | | | 85.3 | | | 76.8 | |
| United Kingdom | 48.5 | | | 54.6 | | | 154.5 | | | 158.3 | |
| Africa | 15.5 | | | 15.1 | | | 45.9 | | | 44.0 | |
| India | 44.4 | | | 34.5 | | | 129.8 | | | 96.4 | |
| Asia Pacific | 19.8 | | | 16.5 | | | 55.7 | | | 46.2 | |
| International gross revenue | $ | 189.2 | | | $ | 178.0 | | | $ | 567.4 | | | $ | 516.7 | |
| | | | | | | |
| Consumer Interactive gross revenue | $ | 147.3 | | | $ | 135.0 | | | $ | 444.3 | | | $ | 401.9 | |
| | | | | | | |
| Total gross revenue | $ | 957.6 | | | $ | 763.1 | | | $ | 2,866.1 | | | $ | 2,229.1 | |
| | | | | | | |
| Intersegment revenue eliminations | | | | | | | |
| U.S. Markets | $ | (17.6) | | | $ | (17.7) | | | $ | (53.1) | | | $ | (52.7) | |
| International | (1.5) | | | (1.5) | | | (4.5) | | | (4.4) | |
| Consumer Interactive | (0.3) | | | (0.5) | | | (0.8) | | | (1.6) | |
| Total intersegment revenue eliminations | $ | (19.4) | | | $ | (19.7) | | | $ | (58.4) | | | $ | (58.7) | |
| | | | | | | |
| Total revenue as reported | $ | 938.2 | | | $ | 743.4 | | | $ | 2,807.8 | | | $ | 2,170.4 | |
| | | | | | | |
| Adjusted EBITDA: | | | | | | | |
| U.S. Markets | $ | 218.4 | | | $ | 185.7 | | | $ | 669.5 | | | $ | 549.2 | |
| International | 83.9 | | | 77.7 | | | 246.9 | | | 221.3 | |
| Consumer Interactive | 73.1 | | | 69.4 | | | 210.0 | | | 192.8 | |
| Corporate | (34.7) | | | (31.1) | | | (101.2) | | | (88.7) | |
| Consolidated Adjusted EBITDA | $ | 340.7 | | | $ | 301.7 | | | $ | 1,025.2 | | | $ | 874.5 | |
| | | | | | | |
Adjusted EBITDA margin:(1) | | | | | | | |
| U.S. Markets | 35.2 | % | | 41.3 | % | | 36.1 | % | | 41.9 | % |
| International | 44.3 | % | | 43.7 | % | | 43.5 | % | | 42.8 | % |
| Consumer Interactive | 49.6 | % | | 51.4 | % | | 47.3 | % | | 48.0 | % |
| Consolidated | 36.3 | % | | 40.6 | % | | 36.5 | % | | 40.3 | % |
(1)Segment Adjusted EBITDA margins are calculated using segment gross revenue and segment Adjusted EBITDA. Consolidated Adjusted EBITDA margin is calculated using total revenue as reported and consolidated Adjusted EBITDA.
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| Reconciliation of net income attributable to TransUnion to consolidated Adjusted EBITDA: | | | | | | | |
| Net income attributable to TransUnion | $ | 79.2 | | | $ | 114.2 | | | $ | 223.0 | | | $ | 369.7 | |
| Discontinued operations, net of tax | (2.4) | | | (21.5) | | | (2.3) | | | (45.6) | |
| Income from continuing operations attributable to TransUnion | $ | 76.8 | | | $ | 92.7 | | | $ | 220.7 | | | $ | 324.1 | |
| Net interest expense | 60.2 | | | 24.9 | | | 160.4 | | | 74.7 | |
| Provision for income taxes | 30.6 | | | 32.3 | | | 84.1 | | | 114.6 | |
| Depreciation and amortization | 129.6 | | | 90.9 | | | 389.0 | | | 273.6 | |
| EBITDA | $ | 297.1 | | | $ | 240.8 | | | $ | 854.1 | | | $ | 787.1 | |
| Adjustments to EBITDA: | | | | | | | |
Stock-based compensation(1) | $ | 19.9 | | | $ | 16.7 | | | $ | 60.8 | | | $ | 49.2 | |
Mergers and acquisitions, divestitures and business optimization(2) | 7.8 | | | 18.8 | | | 36.4 | | | 29.4 | |
Accelerated technology investment(3) | 12.1 | | | 12.6 | | | 32.2 | | | 29.7 | |
Net other(4) | 3.8 | | | 12.8 | | | 41.7 | | | (20.9) | |
| Total adjustments to EBITDA | $ | 43.6 | | | $ | 60.9 | | | $ | 171.1 | | | $ | 87.4 | |
| Consolidated Adjusted EBITDA | $ | 340.7 | | | $ | 301.7 | | | $ | 1,025.2 | | | $ | 874.5 | |
| | | | | | | |
| Net income attributable to TransUnion margin | 8.4 | % | | 15.4 | % | | 7.9 | % | | 17.0 | % |
| Consolidated Adjusted EBITDA margin | 36.3 | % | | 40.6 | % | | 36.5 | % | | 40.3 | % |
As a result of displaying amounts in millions, rounding differences may exist in the tables above and footnotes below.
(1)Consisted of stock-based compensation, including amounts which are cash settled.
(2)Mergers and acquisitions, divestitures and business optimization consisted of the following adjustments:
For the three months ended September 30, 2022, $8.7 million of Neustar integration costs; $3.4 million of acquisition expenses; a $(3.4) million gain related to a government tax reimbursement from a recent business acquisition; $(0.7) million reimbursements for transition services related to divested businesses, net of separation expenses; and a $(0.3) million adjustment to the fair value of a put option liability related to a minority investment.
For the nine months ended September 30, 2022, $25.5 million of Neustar integration costs; $21.4 million of acquisition expenses; $(6.0) million reimbursements for transition services related to divested businesses, net of separation expenses; a $(3.4) million gain related to a government tax reimbursement from a recent business acquisition; and a $(1.0) million adjustment to the fair value of a put option liability related to a minority investment.
For the three months ended September 30, 2021, $18.3 million of acquisition expenses; and $0.5 million of adjustments to contingent consideration expense from previous acquisitions.
For the nine months ended September 30, 2021, $20.4 million of acquisition expenses; $8.4 million of adjustments to contingent consideration expense from previous acquisitions; a $1.1 million gain reduction to notes receivable that were converted into equity upon acquisition and consolidation of an entity; and a ($0.5) million gain on the sale of a cost method investment.
(3)Represents expenses associated with our accelerated technology investment to migrate to the cloud.
(4)Net other consisted of the following adjustments:
For the three months ended September 30, 2022, a $3.8 million net loss from currency remeasurement of our foreign operations, loan fees and other.
For the nine months ended September 30, 2022, $28.4 million for certain legal and regulatory expenses; $6.5 million of deferred loan fees written off as a result of the prepayments on our debt; and a $6.8 million net loss from currency remeasurement of our foreign operations, loan fees and other.
For the three months ended September 30, 2021, $12.0 million for certain legal and regulatory expenses; and a $0.8 million net loss from currency remeasurement of our foreign operations, loan fees and other.
For the nine months ended September 30, 2021, a $(20.4) million net reduction in certain legal and regulatory expenses; and a ($0.5) net gain from currency remeasurement of our foreign operations, loan fees and other.
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, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| Income from continuing operations attributable to TransUnion | | $ | 76.8 | | | $ | 92.7 | | | $ | 220.7 | | | $ | 324.1 | |
| Discontinued operations, net of tax | | 2.4 | | | 21.5 | | | 2.3 | | | 45.6 | |
| Net income attributable to TransUnion | | $ | 79.2 | | | $ | 114.2 | | | $ | 223.0 | | | $ | 369.7 | |
| | | | | | | | |
| Weighted-average shares outstanding: | | | | | | | | |
| Basic | | 192.6 | | | 191.6 | | | 192.4 | | | 191.3 | |
| Diluted | | 193.2 | | | 193.1 | | | 193.1 | | | 192.9 | |
| | | | | | | | |
| Basic earnings per common share from: | | | | | | | | |
| Income from continuing operations attributable to TransUnion | | $ | 0.40 | | | $ | 0.48 | | | $ | 1.15 | | | $ | 1.69 | |
| Discontinued operations, net of tax | | 0.01 | | | 0.11 | | | 0.01 | | | 0.24 | |
| Net Income attributable to TransUnion | | $ | 0.41 | | | $ | 0.60 | | | $ | 1.16 | | | $ | 1.93 | |
| Diluted earnings per common share from: | | | | | | | | |
| Income from continuing operations attributable to TransUnion | | $ | 0.40 | | | $ | 0.48 | | | $ | 1.14 | | | $ | 1.68 | |
| Discontinued operations, net of tax | | 0.01 | | | 0.11 | | | 0.01 | | | 0.24 | |
| Net Income attributable to TransUnion | | $ | 0.41 | | | $ | 0.59 | | | $ | 1.15 | | | $ | 1.92 | |
| | | | | | | | |
| Reconciliation of net income attributable to TransUnion to Adjusted Net Income: | | | | | | | | |
| Net income attributable to TransUnion | | $ | 79.2 | | | $ | 114.2 | | | $ | 223.0 | | | $ | 369.7 | |
| | | | | | | | |
| Discontinued operations, net of tax | | (2.4) | | | (21.5) | | | (2.3) | | | (45.6) | |
| Income from continuing operations attributable to TransUnion | | $ | 76.8 | | | $ | 92.7 | | | $ | 220.7 | | | $ | 324.1 | |
| Adjustments before income tax items: | | | | | | | | |
Stock-based compensation(1) | | 19.9 | | | 16.7 | | | 60.8 | | | 49.2 | |
Mergers and acquisitions, divestitures and business optimization(2) | | 7.8 | | | 18.8 | | | 36.4 | | | 29.4 | |
Accelerated technology investment(3) | | 12.1 | | | 12.6 | | | 32.2 | | | 29.7 | |
Net other(4) | | 3.4 | | | 12.4 | | | 40.5 | | | (22.0) | |
Amortization of certain intangible assets(5) | | 76.7 | | | 44.7 | | | 231.1 | | | 134.9 | |
| Total adjustments before income tax items | | $ | 119.9 | | | $ | 105.2 | | | $ | 401.0 | | | $ | 221.2 | |
| Change in provision for income taxes per schedule 4 | | $ | (16.5) | | | $ | (21.4) | | | $ | (73.2) | | | $ | (37.9) | |
| Adjusted Net Income | | $ | 180.2 | | | $ | 176.5 | | | $ | 548.5 | | | $ | 507.4 | |
| | | | | | | | |
| Weighted-average shares outstanding: | | | | | | | | |
| Basic | | 192.6 | | | 191.6 | | | 192.4 | | | 191.3 | |
| Diluted | | 193.2 | | | 193.1 | | | 193.1 | | | 192.9 | |
| | | | | | | | |
| Adjusted Earnings per Share: | | | | | | | | |
| Basic | | $ | 0.94 | | | $ | 0.92 | | | $ | 2.85 | | | $ | 2.65 | |
| Diluted | | $ | 0.93 | | | $ | 0.91 | | | $ | 2.84 | | | $ | 2.63 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Reconciliation of diluted earnings per share from net income attributable to TransUnion to Adjusted Diluted Earnings per Share: | | | | | | | | |
| Diluted earnings per common share from: | | | | | | | | |
| Net income attributable to TransUnion | | $ | 0.41 | | | $ | 0.59 | | | $ | 1.15 | | | $ | 1.91 | |
| Discontinued operations, net of tax | | (0.01) | | | (0.11) | | | (0.01) | | | (0.24) | |
| Income from continuing operations attributable to TransUnion | | $ | 0.40 | | | $ | 0.48 | | | $ | 1.14 | | | $ | 1.68 | |
| Adjustments before income tax items: | | | | | | | | |
Stock-based compensation(1) | | 0.10 | | | 0.09 | | | 0.31 | | | 0.25 | |
Mergers and acquisitions, divestitures and business optimization(2) | | 0.04 | | | 0.10 | | | 0.19 | | | 0.15 | |
Accelerated technology investment(3) | | 0.06 | | | 0.07 | | | 0.17 | | | 0.15 | |
Net other(4) | | 0.02 | | | 0.06 | | | 0.21 | | | (0.11) | |
Amortization of certain intangible assets(5) | | 0.40 | | | 0.23 | | | 1.20 | | | 0.70 | |
| Total adjustments before income tax items | | $ | 0.62 | | | $ | 0.54 | | | $ | 2.08 | | | $ | 1.15 | |
| Change in provision for income taxes per schedule 4 | | $ | (0.09) | | | $ | (0.11) | | | $ | (0.38) | | | $ | (0.20) | |
| Adjusted Diluted Earnings per Share | | $ | 0.93 | | | $ | 0.91 | | | $ | 2.84 | | | $ | 2.63 | |
As a result of displaying amounts in millions, rounding differences may exist in the table above and footnotes below.
(1)Consisted of stock-based compensation, including amounts which are cash settled.
(2)Mergers and acquisitions, divestitures and business optimization consisted of the following adjustments:
For the three months ended September 30, 2022, $8.7 million of Neustar integration costs; $3.4 million of acquisition expenses; a $(3.4) million gain related to a government tax reimbursement from a recent business acquisition; $(0.7) million reimbursements for transition services related to divested businesses, net of separation expenses; and a $(0.3) million adjustment to the fair value of a put option liability related to a minority investment.
For the nine months ended September 30, 2022, $25.5 million of Neustar integration costs; $21.4 million of acquisition expenses; $(6.0) million reimbursements for transition services related to divested businesses, net of separation expenses; a $(3.4) million gain related to a government tax reimbursement from a recent business acquisition; and a $(1.0) million adjustment to the fair value of a put option liability related to a minority investment.
For the three months ended September 30, 2021, $18.3 million of acquisition expenses; and $0.5 million of adjustments to contingent consideration expense from previous acquisitions.
For the nine months ended September 30, 2021, $20.4 million of acquisition expenses; $8.4 million of adjustments to contingent consideration expense from previous acquisitions; a $1.1 million gain reduction to notes receivable that were converted into equity upon acquisition and consolidation of an entity; and a ($0.5) million gain on the sale of a cost method investment.
(3)Represents expenses associated with our accelerated technology investment to migrate to the cloud.
(4)Net other consisted of the following adjustments:
For the three months ended September 30, 2022, a $3.4 million net loss from currency remeasurement of our foreign operations and other.
For the nine months ended September 30, 2022, a $28.4 million net increase in certain legal and regulatory expenses; $6.5 million of deferred loan fees written off as a result of the prepayments on our debt; and a $5.6 million net loss from currency remeasurement of our foreign operations and other.
For the three months ended September 30, 2021, a $12.0 million net increase in certain legal and regulatory expenses and a $0.4 million net loss from currency remeasurement of our foreign operations and other.
For the nine months ended September 30, 2021, a $(20.4) million net reduction in certain legal and regulatory expenses; and a $(1.7) million net loss from currency remeasurement of our foreign operations and other.
(5)Consisted of amortization of intangible assets from our 2012 change in control transaction and amortization of intangible assets established in business acquisitions after our 2012 change in control transaction.
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, |
| 2022 | | 2021 | | 2022 | | 2021 |
| Income from continuing operations before income taxes | $ | 110.8 | | | $ | 128.9 | | | $ | 316.1 | | | $ | 450.7 | |
| Total adjustments before income tax items from schedule 3 | 119.9 | | | 105.2 | | | 401.0 | | | 221.2 | |
| Noncontrolling interest portion of Adjusted Net Income adjustments | — | | | — | | | — | | | (2.0) | |
| Adjusted income from continuing operations before income taxes | $ | 230.8 | | | $ | 234.1 | | | $ | 717.0 | | | $ | 669.9 | |
| | | | | | | |
| Provision for income taxes | (30.6) | | | (32.3) | | | (84.1) | | | (114.6) | |
| Adjustments for income taxes: | | | | | | | |
Tax effect of above adjustments(1) | (26.1) | | | (18.3) | | | (82.7) | | | (40.2) | |
| Eliminate impact of excess tax benefits for share compensation | (0.6) | | | (1.0) | | | (5.6) | | | (8.6) | |
Other(2) | 10.2 | | | (2.1) | | | 15.1 | | | 10.9 | |
| Total adjustments for income taxes | $ | (16.5) | | | $ | (21.4) | | | $ | (73.2) | | | $ | (37.9) | |
| Adjusted provision for income taxes | $ | (47.1) | | | $ | (53.7) | | | $ | (157.3) | | | $ | (152.6) | |
| | | | | | | |
| Effective tax rate | 27.6 | % | | 25.0 | % | | 26.6 | % | | 25.4 | % |
| Adjusted Effective Tax Rate | 20.4 | % | | 22.9 | % | | 21.9 | % | | 22.8 | % |
As a result of displaying amounts in millions, rounding differences may exist in the table above.
(1)Tax rates used to calculate the tax expense impact are based on the nature of each item.
(2)For the three months ended September 30, 2022, $6.7 million of valuation allowances related to prior periods; $1.8 million of return to provision and audit adjustments related to prior periods; and $1.7 million of other adjustments.
For the nine months ended September 30, 2022, $7.3 million of valuation allowances related to prior periods; $2.8 million of return to provision and audit adjustments related to prior periods; $2.0 million of deferred tax rate adjustments; and $3.0 million of other adjustments.
For the three months ended September 30, 2021, $0.8 million of deferred tax rate adjustments; $(1.5) million of return to provision and audit adjustments related to prior periods; and $(1.4) million of other adjustments.
For the nine months ended September 30, 2021, $21.6 million on deferred tax rate adjustments; $(12.4) million of return to provision and audit adjustments related to prior periods; and $1.7 million of other adjustments.
SCHEDULE 5
TRANSUNION AND SUBSIDIARIES
Segment Depreciation and Amortization (Unaudited)
(in millions)
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| | | | | | | |
| U.S. Markets | $ | 88.9 | | | $ | 53.0 | | | $ | 263.2 | | | $ | 158.1 | |
| International | 30.8 | | | 32.6 | | | 95.7 | | | 99.7 | |
| Consumer Interactive | 8.6 | | | 3.9 | | | 26.2 | | | 11.4 | |
| Corporate | 1.2 | | | 1.4 | | | 3.8 | | | 4.4 | |
| Total depreciation and amortization | $ | 129.6 | | | $ | 90.9 | | | $ | 389.0 | | | $ | 273.6 | |
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)
(in millions, except per share data)
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended December 31, 2022 | | Twelve Months Ended December 31, 2022 |
| | Low | | High | | Low | | High |
| Guidance reconciliation of net income attributable to TransUnion to Adjusted EBITDA: | | | | | | | |
| Net income attributable to TransUnion | $ | 54 | | | $ | 65 | | | $ | 277 | | | $ | 288 | |
| Discontinued operations, net of tax | (3) | | | (3) | | | (5) | | | (5) | |
| Income from continuing operations attributable to TransUnion | $ | 51 | | | $ | 62 | | | $ | 271 | | | $ | 283 | |
| Interest, taxes and depreciation and amortization | 210 | | | 214 | | | 844 | | | 847 | |
| EBITDA | $ | 261 | | | $ | 276 | | | $ | 1,115 | | | $ | 1,130 | |
Stock-based compensation, mergers, acquisitions divestitures and business optimization-related expenses and other adjustments(1) | 57 | | | 57 | | | 228 | | | 228 | |
| Adjusted EBITDA | $ | 318 | | | $ | 333 | | | $ | 1,343 | | | $ | 1,358 | |
| | | | | | | |
| Net income attributable to TransUnion margin | 6.0 | % | | 7.1 | % | | 7.5 | % | | 7.7 | % |
| Adjusted EBITDA margin | 35.5 | % | | 36.3 | % | | 36.3 | % | | 36.5 | % |
| | | | | | | |
| Guidance reconciliation of diluted earnings per share to Adjusted Diluted Earnings per Share: | | | | | | | |
| Diluted earnings per share | $ | 0.28 | | | $ | 0.34 | | | $ | 1.43 | | | $ | 1.49 | |
Adjustments to diluted earnings per share(1) | 0.52 | | | 0.52 | | | 2.21 | | — | | 2.21 | |
| Adjusted Diluted Earnings per Share | $ | 0.80 | | | $ | 0.86 | | | $ | 3.63 | | | $ | 3.69 | |
As a result of displaying amounts in millions, rounding differences may exist in the table above.
(1)These adjustments include 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.