Equifax Inc at Barclays Global Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Manav Patnaik - Barclays - Analyst : Mark, maybe I'll just add with the broader macro question for you. Just -- there's obviously a lot of debate in the markets out there around rates and if it's(inaudible), et cetera. But just the overall dynamics. You guys have a unique view on the credit data, the consumer data. So from your standpoint, maybe your view on where the markets are today.

Question: Manav Patnaik - Barclays - Analyst : Let's come back to mortgage.

Question: Manav Patnaik - Barclays - Analyst : Yeah. And so maybe just two things. First, I think you're right, the low-income consumer is being challenged. That's the old news or has been in the news.

Question: Manav Patnaik - Barclays - Analyst : Correct. Have you seen any signs of that spilling into the middle income? Because consumer conference we had last week, there was some talk of that.

Question: Manav Patnaik - Barclays - Analyst : And just for perspective, like would you see signs early enough changing? Or do you get data to lag just for the --

Question: Manav Patnaik - Barclays - Analyst : Got it. And if you can just quickly double quick on auto a little bit because I think I referred to Allied this morning reported and there's been some negative reactions in consumer finance stocks because of that. But just in auto specifically, I know you already talked about a little slowdown in the second quarter. But is that -- any signs of worry, I guess, is more the question?

Question: Manav Patnaik - Barclays - Analyst : Got it. And before we go into mortgage, John, maybe if you could just help us frame in terms of the exposure that Equifax has. Is it three lending categories for auto, card, mortgage, P loans, just to help us frame how we should think about sensitivity as well.

Question: Manav Patnaik - Barclays - Analyst : Got it. And then, Mark, maybe just before mortgage one more since John mentioned Talent Solution. Do you guys have insight into the job market as well. Those volumes clearly must be coming down. I don't know if it's down more relative to your expectations for the second half, but just any views on what you're seeing in the hiring market there.

Question: Manav Patnaik - Barclays - Analyst : Got it. So maybe now on mortgage. We spoke last week, and it sounded like you were not getting too carried away with the headline numbers that we all see on mortgage apps potential refi. And I think we want to get excited about it. Or maybe just give us some perspective on how it stacks up with your expectations?

Question: Manav Patnaik - Barclays - Analyst : Got it. And then just back to the near term, John, I think you had said you had assumed inquiry is down 7% in the third quarter and then flat in the fourth quarter. But just to my initial question, the headlines feel like it shouldn't be a down quarter. Like are we missing some kind of seasonality or just help us bridge that gap?

Question: Manav Patnaik - Barclays - Analyst : Got it. Just two follow-ups to that $4 number, the power of the mortgage. So first, the volume recovery, is that just a matter of when, not if, from your standpoint? I know it's hard to predict the time of the recovery. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2024 / 2:30PM, EFX.N - Equifax Inc at Barclays Global Financial Services Conference

Question: Manav Patnaik - Barclays - Analyst : Got it. And then the -- you mentioned pricing, that $4 on current pricing you said. Can you just talk about your expectations for your own pricing? And then I'm guessing third-party pricing will increase as well.

Question: Manav Patnaik - Barclays - Analyst : Got it. And John, just on the mortgage outperformance, especially in EWS, I guess, the amount of outperformance has come down over the years. So maybe just help us understand that. Is that partly also because of just a really low volume environment and you think that will pick up when things get better? Or how should we bridge that gap?

Question: Manav Patnaik - Barclays - Analyst : Yeah. And I want to move into Workforce and Workday and all that stuff. But before that, maybe just around out this kind of macro view rates coming down on its own, great probably spurs lending, auto, mortgage, et cetera. But if it comes down too much, it's probably because something is wrong with the economy. So can you just help us appreciate how you would frame Equifax's recession resilience in that scenario?

Question: Manav Patnaik - Barclays - Analyst : Got it. And John, while we are at it on the cloud transformation that -- or the tech transformation that's now, I think, complete. Can you just remind us of the financial impacts, I think fourth quarter assumes a full run rate of what's been done, but just help us remind us of what you assume there from cost-benefit perspective?

Question: Manav Patnaik - Barclays - Analyst : Yeah. And John, maybe just to wrap up. Your second half guidance implies kind of a ramp relative to the first half. On the EPS side, you talked a little bit about the margin benefits on the top line, you talked a little bit about the better outperformance in EWS. What are some of the other factors in that second half ramp that you feel comfortable with?

Question: Manav Patnaik - Barclays - Analyst : Got it. Maybe moving on in terms of records. Mark, you alluded to the Workday contract you signed. I mean, you don't typically put out the press release when you signed one. Obviously, it's Workday, but there's a lot of noise around the numbers, et cetera, but I'm guessing it's a sizable contract. Just help us frame it there.

Question: Manav Patnaik - Barclays - Analyst : Got it. And just on the record front, I mean, your database is unmatched and you keep signing these exclusive partnerships. But yes, we get a lot of questions around competition and someone that is dropping up every day and they're reporting high growth rates. So I mean, I guess there's place for more than monthly in the market. There's a lot of records you don't have. So someone has to monetize them. But are you seeing more competition? Just your thoughts on the competitive --

Question: Manav Patnaik - Barclays - Analyst : Got it. Maybe we can end with the topic of capital allocation, John, maybe to start with you. I think you said leverage had come down to 2.5 times by the fourth quarter. And then I think you guys said free cash flow accelerating next year once you will return to dividends, buybacks. I know you're not giving '25 guidance, but just to frame the acceleration you referred to? And just how should we think about the dividend and the return of the buybacks?

Question: Manav Patnaik - Barclays - Analyst : Got it. And maybe in just the last 30 seconds here, to reiterate that point on M&A, right? A lot of shareholders are looking forward to the more well-rounded capital allocation.

Question: Manav Patnaik - Barclays - Analyst : And I think you said just to confirm, based on your M&A pipeline today, we shouldn't expect any large deals which would which should derail the timing on them.

Question: Manav Patnaik - Barclays - Analyst : All right, good to know. All right, we'll end it there. Thank you guys so much.