Equifax 10-Q 2024-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended March 31, 2024

OR

For the transition period from to .

Commission File Number: 001-06605

EQUIFAX INC.

(Exact name of registrant as specified in its charter)

404-885-8000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

On April 5, 2024, there were 123,611,310 shares of the registrant’s common stock outstanding.

EQUIFAX INC.

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED MARCH 31, 2024

INDEX

FORWARD-LOOKING STATEMENTS

This report contains information that may constitute “forward-looking statements.” Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “may” and similar expressions identify forward-looking statements, which generally are not historical in nature. All statements that address future operating performance and events or developments that we expect or anticipate will occur in the future, including statements relating to future operating results, improvements in our information technology and data security infrastructure, including as a part of our cloud data and technology transformation, our strategy, the expected financial and operational benefits, synergies and growth from our acquisitions, changes in U.S. and worldwide economic conditions, such as changes in interest rates and inflation, that materially impact consumer spending, home prices, investment values, consumer debt, unemployment rates and the demand for Equifax's products and services, our culture, our ability to innovate, the market acceptance of new products and services and similar statements about our business plans are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections, including without limitation our expectations regarding the Company’s outlook, long-term organic and inorganic growth, and customer acceptance of our business solutions referenced below under “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation — Business Overview.” These risks and uncertainties include, but are not limited to, those described in Part II, “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2023, and those described from time to time in our future reports filed with the United States Securities and Exchange Commission (“SEC”). As a result of such risks and uncertainties, we urge you not to place undue reliance on any such forward-looking statements. Forward-looking statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

PART I. FINANCIAL INFORMATION

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

See Notes to Consolidated Financial Statements.

EQUIFAX INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

See Notes to Consolidated Financial Statements.

EQUIFAX INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

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The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the results of operations and financial condition of Equifax Inc. MD&A is provided as a supplement to and should be read in conjunction with our consolidated financial statements and the accompanying Notes to Financial Statements in Item 1 of this Form 10-Q. This section discusses the results of our operations for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. All percentages have been calculated using unrounded amounts for each of the periods presented.

As used herein, the terms Equifax, the Company, we, our and us refer to Equifax Inc., a Georgia corporation, and its consolidated subsidiaries as a combined entity, except where it is clear that the terms mean only Equifax Inc.

All references to earnings per share data in MD&A are to diluted earnings per share, or EPS, unless otherwise noted. Diluted EPS is calculated to reflect the potential dilution that would occur if stock options or other contracts to issue common stock were exercised and resulted in additional common shares outstanding.

BUSINESS OVERVIEW

Equifax Inc. is a global data, analytics and technology company. We provide information solutions for businesses, governments and consumers, and we provide human resources business process automation and outsourcing services for employers. We have a large and diversified group of clients, including financial institutions, corporations, government agencies and individuals. Our services are based on comprehensive databases of consumer and business information derived from numerous sources including credit, financial assets, telecommunications and utility payments, employment, income, educational history, criminal justice data, healthcare professional licensure and sanctions, demographic and marketing data. We use advanced statistical techniques, machine learning and proprietary software tools to analyze available data to create customized insights, decision-making and process automation solutions and processing services for our clients. We are a leading provider of information and solutions used in payroll-related and human resource management business process services in the U.S. as well as e-commerce fraud and charge back protection services in North America. For consumers, we provide products and services to help people understand, manage and protect their personal information and make more informed financial decisions. Additionally, we also provide information, technology and services to support debt collections and recovery management.

We currently operate in four global regions: North America (U.S. and Canada), Asia Pacific (Australia, New Zealand and India), Europe (the U.K., Spain and Portugal) and Latin America (Argentina, Brazil, Chile, Costa Rica, Dominican Republic, Ecuador, El Salvador, Honduras, Mexico, Paraguay, Peru and Uruguay). We maintain support operations in Chile, Costa Rica, India and Ireland. We also have investments in consumer and/or commercial credit information companies through joint ventures in Brazil, Cambodia, Malaysia and Singapore.

Recent Events and Company Outlook

As further described in our 2023 Form 10-K, we operate in the U.S., which represented 77% of our revenue in 2023, and internationally in 20 countries. Our products and services span a wide variety of vertical markets including financial services, mortgage, talent solutions, federal, state and local governments, automotive, telecommunications, e-commerce and many others.

Demand for our services tends to be correlated to general levels of economic activity and to consumer credit and small business commercial credit decisioning and portfolio review, marketing, identity validation and fraud protection activity, employee hiring and onboarding activity, and activity in provisioning support services in the U.S. by government agencies. Demand is also enhanced by our initiatives to expand our products, capabilities and markets served.

For 2024, our planning assumes that U.S. economic activity, as measured by GDP, is expected to grow but at a slower rate of growth than experienced in 2023. Our plan assumes the U.S. mortgage market, as measured by credit inquiries, is expected to decline by about 11% in 2024 versus 2023. The U.S. mortgage market, particularly the mortgage refinance portion of the U.S. mortgage market, can be significantly impacted by U.S. interest rates which impact mortgage rates available to consumers. In the international markets in which we operate, in particular in Australia, the U.K. and Canada, our planning also assumes economic activity, as measured by GDP, to grow in 2024 but at slower rates than in 2023.

Segment and Geographic Information

Segments. The Workforce Solutions segment consists of the Verification Services and Employer Services business lines. Verification Services revenue is transaction-based and is derived primarily from employment and income verification, as well as criminal justice data. Employer Services revenue is derived from our provision of certain human resources business process outsourcing services that include both transaction and subscription based product offerings. These services include unemployment claims management, I-9 and onboarding services, Affordable Care Act compliance management, tax credits and incentives and other complementary employment-based transaction services. Workforce Solutions has established operations in Canada, Australia and the U.K.

The USIS segment consists of three service lines: Online Information Solutions, Mortgage Solutions, and Financial Marketing Services. Online Information Solutions and Mortgage Solutions revenue is principally transaction-based and is derived from our sales of products such as consumer and commercial credit reporting and scoring, identity management, fraud detection, modeling services and consumer credit monitoring services. USIS also markets certain decisioning services which facilitate and automate a variety of consumer and commercial credit-oriented decisions. Online Information Solutions also includes our U.S. consumer credit monitoring solutions business. Financial Marketing Services revenue is principally project and subscription based and is derived from our sales of batch credit and consumer wealth information such as those that assist clients in acquiring new customers, cross-selling to existing customers and managing portfolio risk.

The International segment consists of Asia Pacific, Europe, Canada and Latin America. Canada’s services are similar to our USIS offerings. Asia Pacific, Europe and Latin America are made up of varying mixes of service lines that are generally consistent with those in our USIS reportable segment. We also provide information and technology services to support lenders and other creditors in the collections and recovery management process.

Geographic Information. We currently have operations in the following countries: Argentina, Australia, Brazil, Canada, Chile, Costa Rica, Dominican Republic, Ecuador, El Salvador, Honduras, India, Ireland, Mexico, New Zealand, Paraguay, Peru, Portugal, Spain, the U.K., Uruguay and the U.S. We also have investments in consumer and/or commercial credit information companies through joint ventures in Brazil, Cambodia, Malaysia and Singapore. Approximately 77% and 78% of our revenue was generated in the U.S. during the three months ended March 31, 2024 and 2023, respectively.

Seasonality. We experience seasonality in certain of our revenue streams. Revenue generated by the online consumer information services component of our USIS operating segment is typically the lowest during the first quarter, when consumer lending activity is at a seasonal low. Revenue generated from the Employer Services business unit within the Workforce Solutions operating segment is generally higher in the first quarter due primarily to the provision of 1095-C services that occur in the first quarter each year. Revenue generated from our financial wealth asset products and data management services in our Financial Marketing Services business is generally higher in the fourth quarter each year due to the significant portion of our annual renewals and deliveries which occur then. Mortgage related revenue is generally higher in the second and third quarters of the year due to the increase in consumer home purchasing during the summer in the U.S. Any change in the U.S. mortgage market has a corresponding impact on revenue and operating profit for our business within the Workforce Solutions and USIS operating segments.

Key Performance Indicators. Management focuses on a variety of key indicators to monitor operating and financial performance. These performance indicators include measurements of operating revenue, change in operating revenue, operating income, operating margin, net income, diluted earnings per share, cash provided by operating activities and capital expenditures. The key performance indicators for the three months ended March 31, 2024 and 2023 were as follows:

*Amounts include accruals for capital expenditures.

Operational and Financial Highlights

• We did not repurchase any shares from public market transactions during the first three months of 2024 and 2023. At March 31, 2024, $520.2 million was available for future purchases of common stock under our share repurchase authorization.

• We paid out $48.2 million or $0.39 per share in dividends to our shareholders during the first three months of 2024.

RESULTS OF OPERATIONS—THREE MONTHS ENDED MARCH 31, 2024 AND 2023

Consolidated Financial Results

Operating Revenue

Revenue increased by $87.4 million, or 7%, for the first quarter of 2024, compared to the same period in 2023. Total revenue was negatively impacted by foreign exchange rates, which decreased revenue by $20.2 million, or 2%, for the first quarter of 2024, compared to same period in 2023.

Revenue in the first quarter of 2024 increased due to revenue growth in USIS, International and Workforce Solutions. International revenue growth was driven by growth in Latin America primarily from the Boa Vista Serviços S.A. ("BVS") acquisition. USIS revenue growth was primarily due to growth in mortgage related online services. Workforce Solutions revenue growth was due to growth in non-mortgage verticals within Verification Services, partially offset by declines in mortgage revenue and declines in Employer Services due to lower tax credit revenue.

Operating Expenses

Cost of services increased $47.3 million in the first quarter of 2024, compared to the same period in 2023. The increase is primarily due to higher royalty costs, costs from BVS which was acquired in the third quarter of 2023, higher costs of purchased data and information, and higher third party cloud usage fees and software costs. The impact of changes in foreign exchange rates on costs of services led to a decrease of $5.8 million in the first quarter of 2024, compared to the same period in 2023.

Selling, general and administrative expenses increased $6.5 million for the first quarter of 2024, compared to the same period in 2023. The increase is primarily due to costs from BVS which was acquired in the third quarter of 2023, as well as higher legal expenses. The impact of changes in foreign currency exchange rates led to a decrease in selling, general and administrative expenses of $8.5 million for the first quarter of 2024, compared to the same period in 2023.

Depreciation and amortization expense increased $14.3 million for the first quarter of 2024, compared to the same period in 2023. The increase is due to higher amortization of purchased intangible assets related to the BVS acquisition, as well as increased amortization of capitalized internal-use software and system costs from technology transformation capital spending incurred previously. The impact of changes in foreign currency exchange rates led to an increase in depreciation and amortization expense of $0.1 million for the first quarter of 2024 compared to the same period in 2023.

Operating Income and Operating Margin

Total company operating margin increased by 0.4 percentage points in the first quarter of 2024, compared to the same period in 2023. The margin increase was due to the aforementioned higher reported revenue, partially offset by the increased operating expenses and amortization expenses during the period.

Interest Expense and Other Income, net

Interest expense increased by $2.1 million in the first quarter of 2024, compared to the same period in 2023. The increase for the first quarter of 2024 was due to higher interest rates attributable to debt agreements entered into during 2023, partially offset by lower weighted average debt balances as compared to the first quarter of 2023.

Other income, net, decreased $2.8 million in the first quarter of 2024, as compared to the same period in 2023. The decrease for the first quarter of 2024 was due to the gain on fair market value adjustment of our investment in BVS in the first quarter of 2023 that did not recur in the first quarter of 2024 due to our acquisition of BVS in the third quarter of 2023, partially offset by higher interest income as compared to the first quarter of 2023.

Income Taxes

Our effective income tax rate was 24.3% for the three months ended March 31, 2024, compared to 25.4% for the three months ended March 31, 2023. Our effective tax rate was lower for the first three months of 2024 as compared to the same periods in 2023 due to more favorable discrete benefits, none of which were individually material, as compared to the prior year, which were partially offset by an increase in the foreign rate differential.

Net Income

Consolidated net income increased by $12.6 million for the first quarter of 2024, compared to the same period in 2023. The increase for the first quarter of 2024 was due to higher levels of operating income from increased revenue, partially offset by increased operating expenses, higher income tax expense, higher interest expense, and lower levels of other income, net.

Segment Financial Results

Workforce Solutions

Workforce Solutions revenue increased by 1% in the first quarter of 2024, compared to the same period in 2023. The increase is due to an increase in non-mortgage verticals within Verification Services, partially offset by declines in mortgage revenue and declines in Employer Services due to lower tax credit revenue.

Verification Services. Revenue increased by 5% for the first quarter of 2024, compared to the same period in 2023. The increase in revenue is primarily due to growth in the government vertical, partially offset by declines in the mortgage vertical.

Employer Services. Revenue decreased by 10% in the first quarter of 2024, compared to the same period in 2023. The decrease for the first quarter of 2024 is primarily due to lower Employee Retention Credit ("ERC") revenue. The ERC revenue decrease is driven by the wind down of the program, accelerated by the IRS pausing new claims processing in the third quarter of 2023.

Workforce Solutions Operating Margin. Operating margin increased to 42.3% for the first quarter of 2024 from 41.7% for the first quarter of 2023. The increased margin is due to the aforementioned increase in revenue.

USIS

U.S. Information Solutions revenue increased by 10% for the first quarter of 2024, compared to the same period in 2023. The increase is due to growth in online revenue primarily from growth in mortgage related online services, as well as growth in consumer solutions revenue and Mortgage Solutions. Growth in mortgage related online revenue and Mortgage Solutions was due to both annual pricing actions and increased mortgage prequalification credit inquiry revenue.

Online Information Solutions. Revenue increased by 12% for the first quarter of 2024, compared to the same period in 2023. The increase is due to higher mortgage revenue due to annual pricing actions and higher mortgage prequalification credit inquiry revenue, as well as continued growth of consumer solutions revenue.

Mortgage Solutions. Revenue increased by 14% in the first quarter of 2024, compared to the same period in 2023. The increase is due to both annual pricing actions and higher mortgage prequalification credit inquiry revenue.

Financial Marketing Services. Revenue decreased by 1% for the first quarter of 2024, compared to the same period in 2023. The decrease is driven by declines in credit marketing services, as well as risk and data services.

USIS Operating Margin. USIS operating margin increased to 19.9% for the first quarter of 2024 from 18.6% for the first quarter of 2023. The margin increase is due to the increase in revenue, partially offset by an increase in operating expenses. The increase in operating expenses is primarily due to increased royalty expenses, increased amortization of capitalized internal-use software and system costs from technology transformation capital spending incurred previously and third party cloud usage fees.

International

International revenue increased by 13% in the first quarter of 2024, compared to the same period in 2023. On a local currency basis, revenue increased by 20% in the first quarter of 2024, driven by revenue growth in Latin America from the BVS

acquisition, as well as growth in Europe and Canada, partially offset by a decline in Australia. Local currency fluctuations against the U.S. dollar negatively impacted revenue by $20.0 million, or 7%, for the first quarter of 2024.

Latin America. On a local currency basis, revenue increased by 102% for the first quarter of 2024, compared to the same period in 2023. The increase in revenue is primarily due to revenue from the BVS acquisition and local currency growth in Argentina. Local currency fluctuations against the U.S. dollar negatively impacted revenue by $21 million, or 37%, for the first quarter of 2024, primarily within Argentina. Reported revenue increased by 65% for the first quarter of 2024, compared to the same period in 2023.

Europe. On a local currency basis, revenue increased by 10% for the first quarter of 2024, compared to the same period in 2023. The increase is due to growth in the credit reporting businesses in the U.K., as well as growth in our debt services business in the U.K. Local currency fluctuations against the U.S. dollar positively impacted revenue by $3 million, or 4%, for the first quarter of 2024. Reported revenue increased by 14% for the first quarter of 2024, compared to the same period in 2023.

Asia Pacific. On a local currency basis, revenue decreased by 10% for the first quarter of 2024, compared to the same period in 2023. The decrease is primarily driven by Australia due to declines in the commercial and consumer credit reporting businesses. Local currency fluctuations against the U.S. dollar negatively impacted revenue by $3.0 million, or 3%, for the first quarter of 2024. Reported revenue decreased by 13% for the first quarter of 2024, compared to the same period in 2023.

Canada. On a local currency basis, revenue increased by 4% for the first quarter of 2024, compared to the same period in 2023. The increase is driven by growth in the direct to consumer, commercial and identity and fraud businesses. Local currency fluctuations against the U.S. dollar positively impacted revenue by $0.2 million, or 0.3%, for the first quarter of 2024. Reported revenue increased by 4% for the first quarter of 2024, compared to the same period in 2023.

International Operating Margin. Operating margin decreased to 9.9% for the first quarter of 2024 from 11.5% for the first quarter of 2023. The decrease in margin for the first quarter of 2024 is principally due to higher amortization of purchased intangible assets related to the BVS acquisition.

General Corporate Expense

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Our general corporate expenses are unallocated costs that are incurred at the corporate level and include those expenses impacted by the overall management and strategic choices of the company, including shared services overhead, technology, security, data and analytics, administrative, legal, restructuring, and the portion of management incentive compensation determined by total company-wide performance.

General corporate expense increased by $0.3 million for the first quarter of 2024, compared to the same period in 2023. The increase is primarily due to higher people costs and litigation expense, partially offset by lower third party cloud usage fees and software costs, as well as lower amortization of capitalized internal-use software and system costs.

LIQUIDITY AND FINANCIAL CONDITION

Management assesses liquidity in terms of our ability to generate cash to fund operating, investing and financing activities. We continue to generate substantial cash from operating activities, remain in a strong financial position and manage our capital structure to meet short- and long-term objectives including reinvestment in existing businesses and completing strategic acquisitions.

Funds generated by operating activities, our $1.5 billion five-year unsecured revolving credit facility ("Revolver") and related commercial paper ("CP") program, more fully described below, are our most significant sources of liquidity. At March 31, 2024, we had $201.0 million in cash and cash equivalents, as well as $1,387.1 million available to borrow under our Revolver.

Sources and Uses of Cash

We believe that our existing cash balance, liquidity available from our CP and Revolver, cash generated from ongoing operations and continued access to public or private debt markets will be sufficient to satisfy cash requirements over the next 12 months and beyond. While there was no significant change in our cash requirements as of March 31, 2024 compared to December 31, 2023, we have utilized existing CP and Revolver capacity, together with cash from operating activities, to meet our current obligations.

Fund Transfer Limitations. The ability of certain of our subsidiaries and associated companies to transfer funds to the U.S. may be limited, in some cases, by certain restrictions imposed by foreign governments. These restrictions do not, individually or in the aggregate, materially limit our ability to service our indebtedness, meet our current obligations or pay dividends. As of March 31, 2024, we held $187.5 million of cash in our foreign subsidiaries.

Information about our cash flows, by category, is presented in the Consolidated Statements of Cash Flows. The following table summarizes our cash flows for the three months ended March 31, 2024 and 2023:

Operating Activities

Cash provided by operating activities in the three months ended March 31, 2024 increased by $101.8 million compared to the prior year period primarily due to changes in our working capital position and increased net income.

Investing Activities

Capital Expenditures

*Amounts above are total cash outflows for capital expenditures.

Our capital expenditures are used for developing, enhancing and deploying new and existing software in support of our expanding product set, replacing or adding equipment, updating systems for regulatory compliance, the licensing of certain software applications, investing in system reliability, security and disaster recovery enhancements, and updating or expanding our office facilities.

Capital expenditures paid in the first three months of 2024 decreased by $26.4 million from the same period in 2023 due to lower capitalized software costs and lower spending on technology infrastructure as compared to the first quarter of 2023 as we continue to make progress toward completion of our technology transformation.

Financing Activities

Borrowings and Credit Facility Availability

Credit Facilities Availability

We have access to a $1.5 billion five-year unsecured revolving credit facility (Revolver) and a $700.0 million delayed draw term loan (Term Loan), collectively known as the “Senior Credit Facilities,” both of which mature in August 2026. Borrowings under the Senior Credit Facilities may be used for working capital, for capital expenditures, to refinance existing debt, to finance acquisitions and for other general corporate purposes. The Revolver includes an option to request a maximum of three one-year extensions of the maturity date any time after the first anniversary of the closing date of the Revolver. Availability of the Revolver is reduced by the outstanding principal balance of our CP notes and by any letters of credit issued under the Revolver.

Our $1.5 billion CP program has been established to allow for borrowing through the private placement of CP with maturities ranging from overnight to 397 days. We may use the proceeds of CP for general corporate purposes. The CP program is supported by our Revolver and the total amount of CP which may be issued is reduced by the amount of any outstanding borrowings under our Revolver and by any letters of credit issued under the facility.

As of March 31, 2024, there were $0.4 million of letters of credit outstanding, no outstanding borrowings under the Revolver, $691.3 million outstanding under the Term Loan and $112.5 million of outstanding CP notes. Availability under the Revolver was $1,387.1 million at March 31, 2024.

At March 31, 2024, 86% of our debt was fixed-rate debt and 14% was effectively variable-rate debt. Our variable-rate debt consists of our outstanding term loan and CP. The interest rates reset periodically, depending on the terms of the respective financing agreements. At March 31, 2024, the interest rate on our variable-rate debt ranged from 5.45% to 6.68%.

Borrowing and Repayment Activity

We primarily borrow under our CP program and Revolver as needed and as availability allows.

Net short-term borrowings primarily represent net borrowings or repayments of outstanding amounts under our CP program.

There were no borrowings on long-term debt for the first three months of 2024. Borrowings on long-term debt represent $175 million of borrowings on our Revolver during the first three months of 2023.

Payments on long-term debt represent $4.4 million of payments on the Term Loan during the first three months of 2024. There were no payments on long-term debt for the first three months of 2023.

Debt Covenants. A downgrade in our credit ratings would increase the cost of borrowings under our CP program, Revolver and Term Loan, and could limit or, in the case of a significant downgrade, preclude our ability to issue CP. Our outstanding indentures and comparable instruments also contain customary covenants including, for example, limits on mortgages, liens, sale/leaseback transactions, mergers and sales of assets.

In March 2023, we amended the Senior Credit Facilities, resulting in a modification of our required maximum leverage ratio, among other changes. As amended, the Senior Credit Facilities require a maximum leverage ratio, defined as consolidated funded debt divided by consolidated EBITDA, of (i) 4.25 to 1.0 commencing with the fourth quarter of 2022 through the fourth quarter of 2023 and (ii) 3.75 to 1.0 commencing with the first quarter of 2024 and for each fiscal quarter ending thereafter

through the remaining term of the Senior Credit Facilities. We may also elect to increase the maximum leverage ratio by 0.5 to 1.0 (subject to a maximum leverage ratio of 4.75 to 1.0) in connection with certain material acquisitions if we satisfy certain requirements. The Senior Credit Facilities also permit cash in excess of $175 million to be netted against debt in the calculation of the leverage ratio, subject to certain restrictions.

As of March 31, 2024, we were in compliance with all of our debt covenants.

We do not have any credit rating triggers that would accelerate the maturity of a material amount of the outstanding debt; however, our 2.6% senior notes due 2024, 2.6% senior notes due 2025, 3.25% senior notes due 2026, 5.1% senior notes due 2027, 5.1% senior notes due 2028, 3.1% senior notes due 2030, 2.35% senior notes due 2031 and 7.0% senior notes due 2037 (collectively, the “Senior Notes”) contain change in control provisions. If the Company experiences a change of control or publicly announces an intention to effect a change of control and the rating on the Senior Notes is lowered by Standard & Poor’s (“S&P”) and Moody’s Investors Service (“Moody’s”) below an investment grade rating within 60 days of such change of control or notice thereof, then the Company will be required to offer to repurchase the Senior Notes at a price equal to 101% of the aggregate principal amount of the Senior Notes plus accrued and unpaid interest.

For additional information about our debt, including the terms of our financing arrangements, basis for variable interest rates and debt covenants, see Note 5 of the Notes to Consolidated Financial Statements in our 2023 Form 10-K.

Equity Transactions

Sources and uses of cash related to equity during the three months ended March 31, 2024 and 2023 were as follows:

- During the first three months of 2024 and 2023, we did not repurchase any shares of our common stock on the open market.

- We maintained our quarterly dividend of $0.39 per share in the first quarter of 2024. We paid cash dividends to Equifax shareholders of $48.2 million and $47.9 million, or $0.39 per share, during the three months ended March 31, 2024 and 2023, respectively.

- We received cash of $19.9 million and $6.6 million during the first three months of 2024 and 2023, respectively, from the exercise of stock options and the employee stock purchase plan.

- We paid taxes of $15.4 million and $15.9 million related to the settlement of equity awards during the first three months of 2024 and 2023, respectively.

At March 31, 2024, the Company had $520.2 million remaining for stock repurchases under the existing authorization from the board of directors.

Contractual Obligations, Commercial Commitments and Other Contingencies

Our contractual obligations and commercial commitments have not changed materially from those reported in our 2023 Form 10-K. For additional information about certain obligations and contingencies, see Note 6 of the Notes to Consolidated Financial Statements in this Form 10-Q.

Off-Balance Sheet Arrangements

There have been no material changes with respect to our off-balance sheet arrangements from those presented in our 2023 Form 10-K.

Benefit Plans

At December 31, 2023, our U.S. Retirement Income Plan met or exceeded ERISA’s minimum funding requirements. In the future, we expect to make minimum funding contributions as required and may make discretionary contributions, depending on certain circumstances, including market conditions and our liquidity needs. We believe additional funding contributions, if any, would not prevent us from continuing to meet our liquidity needs, which are primarily funded from cash flows generated by operating activities, available cash and cash equivalents, our CP program and our Revolver.

For our non-U.S., tax-qualified retirement plans, we fund an amount sufficient to meet minimum funding requirements but no more than allowed as a tax deduction pursuant to applicable tax regulations. For our non-qualified supplementary retirement plans, we fund the benefits as they are paid to retired participants, but accrue the associated expense and liabilities in accordance with U.S. GAAP.

For additional information about our benefit plans, see Note 9 of the Notes to Consolidated Financial Statements in our 2023 Form 10-K.

Foreign Currency

Argentina experienced multiple periods of increasing inflation rates, devaluation of the peso, and increasing borrowing rates. As such, Argentina was deemed a highly inflationary economy by accounting policymakers. Beginning in the third quarter of 2018, we have accounted for Argentina as a highly inflationary economy which resulted in the recognition of a $0.1 million foreign currency loss that was recorded in other income, net in our Consolidated Statements of Income during the three months ended March 31, 2024 and March 31, 2023.

RECENT ACCOUNTING PRONOUNCEMENTS

For information about new accounting pronouncements and the potential impact on our Consolidated Financial Statements, see Note 1 of the Notes to Consolidated Financial Statements in this Form 10-Q and Note 1 of the Notes to Consolidated Financial Statements in our 2023 Form 10-K.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

The Company’s Consolidated Financial Statements are prepared in conformity with U.S. GAAP. This requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in our Consolidated Financial Statements and the Notes to Consolidated Financial Statements. We believe the most complex and sensitive judgments, because of their significance to the Consolidated Financial Statements, result primarily from the need to make estimates and assumptions about the effects of matters that are inherently uncertain. The “Application of Critical Accounting Policies and Estimates” section in the MD&A, and Note 1 of the Notes to Consolidated Financial Statements, in our 2023 Form 10-K describe the significant accounting estimates and policies used in the preparation of our Consolidated Financial Statements. Although we believe that our estimates, assumptions and judgments are reasonable, they are based upon information available at the time. Actual results may differ significantly from these estimates under different assumptions, judgments or conditions.

For information regarding our exposure to certain market risks, see “Quantitative and Qualitative Disclosures about Market Risk,” in Part II, Item 7A of our 2023 Form 10-K. There were no material changes to our market risk exposure during the three months ended March 31, 2024.

As of the end of the period covered by this report, an evaluation was carried out by the Company’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report. In addition, no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Remaining Matters Related to 2017 Cybersecurity Incident

Canadian Class Actions. Five putative Canadian class actions, four of which are on behalf of a national class of approximately 19,000 Canadian consumers, are pending against us in Ontario, British Columbia and Alberta. Each of the proposed Canadian class actions asserts a number of common law and statutory claims seeking monetary damages and other related relief in connection with a material cybersecurity incident in 2017. In addition to seeking class certification on behalf of Canadian consumers whose personal information was allegedly impacted by the 2017 cybersecurity incident, in some cases, plaintiffs also seek class certification on behalf of a larger group of Canadian consumers who had contracts for subscription products with Equifax around the time of the incident or earlier and were not impacted by the incident. The Ontario class action has been certified in part but is otherwise at a preliminary stage. All other purported class actions are at preliminary stages or stayed.

CFPB Matters

In December 2021, we received a Civil Investigative Demand (a “CID”) from the Consumer Financial Protection Bureau (“CFPB”) as part of its investigation into our consumer disputes process in order to determine whether we have followed Fair Credit Reporting Act (“FCRA”) requirements for the proper handling of consumer disputes. The CID requests the production of documents and answers to written questions. We are cooperating with the CFPB in its investigation.

In January 2023, the CFPB informed us that its enforcement division will be investigating our previously-disclosed coding issue identified within a legacy server environment in the U.S. that impacted how some credit scores were calculated during a three-week period in 2022. We are cooperating with the CFPB in its investigation.

In July 2023, we received a CID from the CFPB as part of its investigation into data accuracy and dispute handling at our Workforce Solutions business unit in order to determine whether we have followed the FCRA's requirements. We received a second CID from the CFPB in March 2024 as part of the same investigation. The CIDs request the production of documents and answers to written questions. We are cooperating with the CFPB in its investigation and providing responses and information on an ongoing basis.

At this time, we are unable to predict the outcome of these CFPB investigations, including whether the investigations will result in any actions or proceedings against us.

Other

Equifax has been named as a defendant in various other legal actions, including administrative claims, regulatory matters, government investigations, class actions and other litigation arising in connection with our business. Some of the legal actions include claims for substantial compensatory or punitive damages or claims for indeterminate amounts of damages. We believe we have defenses to and, where appropriate, will contest many of these matters. Given the number of these matters, some are likely to result in adverse judgments, penalties, injunctions, fines or other relief. We may explore potential settlements before a case is taken through trial because of the uncertainty and risks inherent in the litigation process.

For information regarding our accounting for legal contingencies, see Note 6 of the Notes to Consolidated Financial Statements in this Form 10-Q.

There have been no material changes with respect to the risk factors disclosed in our 2023 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table contains information with respect to purchases made by or on behalf of Equifax or any “affiliated purchaser” (as defined in Rule 10b-18(a) (3) under the Securities Exchange Act of 1934), of our common stock during the quarter ended March 31, 2024:

(1)The total number of shares purchased for the quarter includes shares surrendered, or deemed surrendered, in satisfaction of the exercise price and/or to satisfy tax withholding obligations in connection with the exercise of employee stock options, totaling 9,885 shares for the month of January 2024, 117,816 shares for the month of February 2024, and 2,375 shares for the month of March 2024.

(2)Average price paid per share for shares purchased as part of our share repurchase program (includes brokerage commissions). For the quarter ended March 31, 2024, we did not repurchase any shares of our common stock under our share repurchase program.

(3)At March 31, 2024, the amount authorized for future share repurchases under the share repurchase program was $520.2 million. The program does not have a stated expiration date.

Dividend and Share Repurchase Restrictions

Our Revolver restricts our ability to pay cash dividends on our capital stock or repurchase capital stock if a default or event of default exists or would result if these payments were to occur, according to the terms of the applicable credit agreements.

Rule 10b5-1 Trading Plans of Directors and Executive Officers

The following table describes any contracts, instructions or written plans for the sale or purchase of Equifax securities and intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act that were adopted by our directors and executive officers during the quarter ended March 31, 2024:

(1) A trading plan may also expire on such earlier date that all transactions under the trading plan are completed.

During the quarter ended March 31, 2024, none of our directors or executive officers terminated a Rule 10b5-1 trading plan or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.