Equifax Inc. (NYSE:EFX) Q4 2017 Earnings Conference Call Transcript

Mar 02, 2018 • 08:30 am ET

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Equifax Inc. (NYSE:EFX) Q4 2017 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, and welcome to the Equifax Fourth Quarter 2017 Earnings Call. Today's conference is being recorded. And at this time, I'd like to turn the conference over to Jeff Dodge. Please go ahead.

Executive
Jeff Dodge

Thanks, and good morning, everyone. Welcome to today's conference call. I'm Jeff Dodge with Investor Relations. And with me today are Paulino Barros, Chief Executive Officer; John Gamble, Chief Financial Officer; and Trevor Burns, Investor Relations. Today's call is being recorded. An archive of the recording will be available later today in the Investor Relations section in the About Equifax tab of our website at www.equifax.com.

During this call, we will be making certain forward-looking statements to help you understand Equifax and its business environment. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from our expectations. Certain risk factors inherent in our business are set forth in filings with the SEC, including our 2017 Form 10-K and subsequent filings.

Also, we will be referring to certain non-GAAP financial measures, including adjusted EPS attributable to Equifax and adjusted EBITDA, which will be adjusted for certain items that affect the comparability of the underlying operational performance. For the fourth quarter of 2017, adjusted EPS attributable to Equifax excludes, among other things, acquisition-related amortization expense; certain costs related to the cybersecurity incident, including costs to investigate and remediate the cybersecurity incident, legal and professional services, a contingent liability for cost associated with providing free credit file monitoring and identity theft protection services to consumers and the income tax effects of stock awards recognized upon vesting or settlement and in the recently enacted US Tax Cuts and Jobs Act of 2017.

Adjusted EBITDA is defined as net income attributable to Equifax adding back interest expense, net of interest income, depreciation and amortization; income tax expense and also excluding certain onetime items, including the cost related to the cybersecurity incident. These non-GAAP measures are detailed in reconciliation tables, which are included with our earnings release and are also posted on our website.

Now, I'd like to turn it over to Paulino.

Executive
Paulino R. Barros

Thank you, Jeff, and good morning, everyone. Yesterday, we provided an update on the cybersecurity incident that occurred last year. Let me provide now some perspective. In conjunction with the forensic investigation completed last fall by Mandiant, we concluded that the attack that was predominantly focused on selling Social Security numbers. So, we worked with Mandiant and defined a reasonable and sound methodology that use names and Social Security numbers as the key data elements to identify persons impacted.

As we continued to analyze the data, we were able to identify approximately 2.4 million consumers, whose names and partial driver's license information were stolen, but who were not in the previously identified population. The information was partial because in the vast majority of cases, it did not include home addresses, state of issuance, date of issuance and/or expiration dates.

They were not identified using the original methodology as their Social