Second Quarter 2018 Earnings Call - TransUnion/media/Files/T/... · RTech September 2016 Auditz...

Second Quarter 2018 Earnings Call

JULY 24, 2018

Jim Peck, President and CEO

Todd Cello, Chief Financial Officer

© 2018 TransUnion LLC All Rights Reserved | 2

This presentation 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. Factors that could cause

TransUnion’s actual results to differ materially from those described in the forward-looking statements

can be found in TransUnion’s Annual Report on Form 10-K for the year ended December 31, 2017, as

modified in any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K, which are

filed with the Securities and Exchange Commission and are available on TransUnion's website

(www.transunion.com/tru) and on the Securities and Exchange Commission's website (www.sec.gov).

TransUnion undertakes no obligation to update the forward-looking statements to reflect the impact of

events or circumstances that may arise after the date of the forward-looking statements.

Forward Looking Statement


• TransUnion delivered a strong second quarter

– Double-digit increases in Revenue, Adjusted EBITDA and Adjusted Diluted

EPS

• Outperforming underlying markets as a result of innovation, new vertical

markets and fast-growing emerging markets

• Closed three acquisitions that will contribute to portfolio diversification

and long-term growth

– Callcredit, iovation, Healthcare Payment Specialists

Second Quarter 2018 Highlights


• Combined CreditVision and CreditVision Link grew ~40% in the U.S. in

second quarter 2018

• CreditVision grew almost 50% outside of the U.S. in second quarter 2018

– Launched in Canada, Hong Kong, India, S. Africa, Colombia, and a number of other LATAM

countries

• FactorTrust data from the short-term lending market enables an enhanced

version of CreditVision Link

• Executing cross-sell opportunities to FactorTrust’s customers using

TransUnion’s products like Collections and Fraud

Driving Growth Through Innovation


• TransUnion’s Insurance vertical continues to show strong revenue growth

• Our trended data product—fundamentally the same concept as CreditVision—for

our credit-based risk scoring model is gaining real traction in the market

• DriverRisk prescreen product continues to deliver strong growth

• Addition of DataLink Services allows us to also resell Motor Vehicle Reports

• The combination of DriverRisk and DataLink creates a unique product offering in

the market that provides underwriters with a more efficient and cost effective

way to manage a critical element of the underwriting process

Expanding In Attractive Vertical Markets


• Emerging markets benefit from generally strong underlying market growth

coupled with our “lift and shift” strategy

• Developed markets are growing as we aggressively “lift and shift” new products,

verticals and capabilities

Expanding In Attractive Geographic Markets


• Strong performance in the Direct channel with solid acquisition and retention as

well as heightened consumer interest in credit monitoring

Growing Consumer Interactive Through New

Partnerships, Verticals And Geographies

• Indirect channel continues to benefit

from strong partner business

– American Express® MyCredit Guide launched

in May and leverages CreditViewTM Dashboard

– Good pipeline of new partner opportunities


• The acquisition of eBureau introduces a unique technology that allows

for rapid model development and deployment

• This capability augments TransUnion’s cutting-edge technology

platform and architecture

• The ability to put models into production in days or hours instead of

weeks is a real competitive advantage in the marketplace

• This technology has broad applicability across all TransUnion verticals

and geographies

Leveraging Our Global Operational Excellence


Acquisition date

Differentiated data assets that

augment our core

New capabilities to expand

in our vertical markets

Expand our

international footprint

Callcredit (U.K.) June 2018

iovation June 2018

HPS June 2018

FactorTrust November 2017

eBureau October 2017

DataLink Services August 2017

RTech September 2016

Auditz June 2016

DHI April 2016

CIFIN (Colombia) February 2016

Trustev December 2015

L2C October 2014

CIBIL (India) May 2014*

TLO December 2013

eScan September 2013

ZipCode (Brazil) March 2013

TransUnion’s Focused Acquisition Strategy Is A

Catalyst For Diversified Above-Market Growth

*Gained controlling position; founding shareholder in 2001.

Acquisitions since 2013


Callcredit Is An Outstanding Fit With TransUnion

• The U.K. market is attractive and growing

– U.K. is the second largest credit bureau market in the world and has grown high-single-

digits in recent years

– Callcredit’s total addressable market (credit, fraud, analytics/decision) is estimated at

$2.4 billion and grew 11% per year from 2014 to 2017

• Callcredit has been outperforming the underlying market through superior

technology and data quality, and that performance is expected to continue

• Meaningful opportunity to optimize the organization and cost structure

– Expect to deliver $15 million of cost savings by the end of 2019 and at least $15 million

more after that


iovation Positions TransUnion As A Clear Leader In

The Fraud And Authentication Market

• The global Fraud and Authentication market is growing strong double-

digits due to increase in digital transactions, consumer preference for

online channels and technological innovation

• iovation is one of the two leading providers of device fraud

identification globally, with data on nearly 5 billion devices

• iovation is a perfect fit with TransUnion’s suite of fraud products,

IDVision

• Together iovation and IDVision form a comprehensive 360 degree of

the consumer including their “terrestrial” data and digital/online data


Healthcare Payment Specialists (HPS) Further Solidifies

TransUnion’s Back-end Health Care Solution

eScan

RTech

Auditz

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Insurance

Discovery

Charity

Screening

Medicare

Bad Debt

Denials

Management

Under-

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Transfer

DRG

Propensity

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DSH

Payments

Complex

DRG, Shadow

Billing, etc.

ADSR

(2007)

Revenue Cycle Management Back-End


YOY change

Revenue +19%

Constant Currency Revenue +19%

Organic Revenue +13%

Adjusted EBITDA +19%

Constant Currency Adjusted EBITDA +19%

Adjusted Diluted EPS +34%

Consolidated Second Quarter 2018 Financial

Highlights

Other items

– Cost of Services +25%

– SG&A +15%

– Adjusted Operating Income +18%

Note: Numbers may not foot due to rounding.


1Q17 2Q17 3Q17 4Q17 1H17 FY17 1Q18 2Q18 1H18

Adjusted EBITDA margin* 37.7% 39.2% 39.0% 38.8% 38.5% 38.7% 37.7% 39.2% 38.4%

Impact of acquisition integration costs ‒ ‒ ‒ 5bps ‒ ‒ 20bps 20bps 20bps

Impact of lower margins from acquisitions ‒ ‒ 15bps 30bps ‒ 10bps 60bps 65bps 60bps

Underlying Adjusted EBITDA margin 37.7% 39.2% 39.1% 39.2% 38.5% 38.8% 38.5% 40.0% 39.3%

Year-over-year change NA NA NA NA NA NA +80bps +80bps +80bps

TransUnion’s Underlying Business Continues To

Deliver Margin Expansion

*For a reconciliation of Adjusted EBITDA and Adjusted EBITDA margin see press release dated July 24, 2018 or Form 10-Q for the second quarter 2018.


YOY Change YOY Constant Currency change YOY Organic change

USIS

Revenue +20% +20% +14%

Online Data Services +23% +23% +14%

Marketing Services +21% +21% +21%

Decision Services +10% +10% +8%

Adj. Operating Income +16% +16% +13%

International

Revenue +22% +22% +13%

Emerging Markets +12% +13% +13%

Developed Markets +40% +37% +12%


Consumer Interactive

Revenue +12% +12% +12%


Segment Second Quarter 2018 Financial Highlights


Attractively Funded Recent Acquisitions Through A

Significantly Oversubscribed Offering

$ in millions 3/31/18

Intra-quarter

change

Incremental

Financing 6/30/18

Revolving Credit Facility $55 ($55) $75 $75

Term Loan A 393 (3) 790 1,180

Term Loan B 1,967 (6) ‒ 1,961

New Term Loan B ‒ ‒ 986 986

Other 9 (1) ‒ 8

Total Debt $2,424 ($65) $1,851 $4,210

Less: cash and equivalents 154 34 4 192

Net Debt $2,270 ($99) $1,847 $4,018

Weighted average cost of debt 3.8% 20bps ‒ 4.0%

FY 2018 net interest expense ~$87.5 $2.5 $43 $133


• Adjusted Revenue: $2.333 to $2.343 billion, +21%;

– Includes 9 points of M&A, 50 bps of one-time incremental monitoring, and 50 bps of headwind from FX

– Adjusted Revenue provides the best comparability to historical as-reported revenue

• Adjusted EBITDA: $904 to $910 million, +21-22%

– Includes 50 bps of headwind from FX

– Adjusted EBITDA margin: up 10-20 bps compared to 2017; up ~80 bps excluding impact of acquisitions

• Adjusted Diluted EPS: $2.42 to $2.44/share, +29-30%; excluding estimated benefit of tax reform +14-15%

– Includes ~$(0.03) headwind: ~$(0.02) from stronger dollar and ~$(0.01) from higher interest due to increase in LIBOR on the debt prior to incremental financing in June

– No change to estimated adjusted tax rate of approximately 28%

– No change to share count of 191 million

– Net Interest Expense $133 million compared to $82 million in 2017, up primarily as a result of incremental debt financing completed in June

– D&A unrelated to change-in-control and subsequent acquisitions of $124 million compared to $102 million in 2017, up as a result of recent acquisitions and growth-oriented investments

Full Year 2018 Guidance


• Adjusted Revenue: $610 to $615 million, +23-24%

– Includes 15 points of M&A, 1 point from one-time incremental monitoring, and

~150 bps of headwind from FX

• Adjusted EBITDA: $237 to $240 million, +22-24%

– Includes 150 bps of headwind from FX

• Adjusted Diluted EPS: $0.61 or $0.62/share, +24-26%; excluding estimated

benefit of tax reform +9-11%

Third Quarter 2018 Guidance

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Final Comments

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