EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contact: John Mongelli
Investor Relations
(770) 752-6171
CHOICEPOINT(R) REPORTS STRONG FIRST QUARTER 2004 RESULTS
ALPHARETTA, GA. - APRIL 22, 2004 - ChoicePoint Inc. (NYSE: CPS), today reported
first quarter total revenue of $217.2 million, reflecting revenue growth over
the comparable period of 2003 of 11 percent. Earnings per share ("EPS") for the
first quarter was $0.37 per share, a 5 percent increase over EPS from
continuing operations of $0.35 in 2003.
"I am extremely pleased with our first quarter 2004 results and the positive
trends we are seeing across many of our businesses" commented Derek V. Smith,
Chairman and CEO. "During the quarter, we continued to execute our strategic
plan by successfully completing two acquisitions. We are well positioned to
have another strong year in 2004."
Chief Financial Officer Steven W. Surbaugh added, "For the quarter, we realized
very strong total revenue growth of 11 percent, internal revenue growth of 7
percent and achieved excellent profit performance. Our internal revenue growth,
exclusive of homeland security revenue, was our highest quarterly increase in
the past three years."
FINANCIAL HIGHLIGHTS - FIRST QUARTER
- - Core revenue (total revenue less reimbursable expenses) increased 11
percent to $204.4 million for the quarter ended March 31, 2004 from
$184.0 million for 2003. Internal revenue increased 7 percent from
2003, as growth in a majority of our businesses offset difficult
comparisons from our marketing businesses and strong homeland security
revenues in the first quarter of 2003. First quarter 2004 total
revenue increased 11 percent to $217.2 million from $194.9 million in
2003.
- - Operating income was $54.3 million for the quarter ended March 31,
2004 compared to $51.8 million for 2003, an increase of 5 percent from
2003, again impacted by the tough homeland security and Marketing
Services comparables from the first quarter of 2003.
ChoicePoint Earnings
Page 2 of 10
- - Net free cash flow (net cash provided by operating activities of
continuing operations of $33.1 million less capital expenditures of
$12.7 million) was $20.4 million for the quarter ended March 31, 2004
which compares to net free cash flow of $18.6 million in the first
quarter of 2003, or an increase of 10 percent.
- - Net debt (total debt less cash) for the quarter ended March 31, 2004,
decreased by $20.0 million from March 31, 2003, to $67.8 million, as
we used cash from operations to fund acquisitions and reduce
indebtedness. Our additional remaining debt capacity under our
committed financing lines is $355 million.
- - During the quarter ended March 31, 2004, the Company acquired The
Templar Corporation ("Templar"), a provider of advanced and secure
information technology solutions and iMapData.com, Inc. ("iMAP"), an
information and analytics company with powerful data visualization
capabilities. Both of these businesses are primarily based in the
Washington, D.C. area.
- - During the first quarter of 2004, ChoicePoint reorganized its product
lines in the Business & Government segment into two separate
reportable segments - Business Services and Government Services - due
to recent acquisitions within the Government Services business unit
and a change in managerial and operational reporting responsibilities.
Historical information in the following tables has been reclassified
to conform with the current presentation.
- - During the first quarter of 2003, the Company recorded a $61.2 million
pre-tax gain on the sale of our CP Commercial Specialists ("CPCS")
business ($32.9 million after tax). The results of CPCS for the period
of 2003 prior to the sale are reported as discontinued operations and
excluded from discussions of continuing operations.
OPERATIONAL HIGHLIGHTS
INSURANCE SERVICES
- - Total revenue increased 14 percent to $86.7 million in the first
quarter of 2004 compared to $76.1 million in the prior year,
representing an internal revenue growth rate of 12 percent. The
personal lines business posted mid-teen internal growth driven by our
National Credit File, MVR-related products and our Current Carrier(R)
product. Our Insurity operations returned to positive internal revenue
growth as expected, posting positive mid-single digit growth for the
quarter.
ChoicePoint Earnings
Page 3 of 10
- - Operating income in Insurance Services was $47.3 million for the first
quarter of 2004, up 11 percent from $42.4 million in the prior year.
Operating profit margin in Insurance Services for the quarter was 54.5
percent, compared to 55.7 percent in the first quarter of 2003. The
increase in operating income is due primarily to the revenue growth
discussed above, offset by higher occupancy and new product initiative
expenses.
BUSINESS SERVICES
- - Total revenue increased 19 percent to $75.9 million in the first
quarter of 2004 compared to $63.9 million in the prior year. Internal
revenue increased 13 percent for the first quarter of 2004 over the
comparable period in 2003 driven primarily by strong growth in our
WorkPlace Solutions and Vital Chek business units.
- - Operating income in Business Services was $14.4 million for the first
quarter of 2004, up 29 percent from $11.2 million in the prior year
primarily due to changes in product mix and cost control initiatives,
implemented in 2003. Operating profit margin in Business Services for
the first quarter of 2004 was 18.9 percent compared to 17.5 percent in
2003, a 140 basis point improvement.
GOVERNMENT SERVICES
- - Total revenue increased 4 percent to $17.7 million in the first
quarter of 2004 compared to $17.1 million in the prior year primarily
due to growth in our public records unit, an increase in forensics
work in our Bode laboratories business and growth from the
acquisitions of Templar and iMAP. Homeland security revenue
comparables caused internal revenue to decline 13 percent for the
first quarter of 2004 over the same period in 2003.
- - Operating income in Government Services was $4.1 million for the first
quarter of 2004, down 6 percent from $4.4 million in the prior year,
primarily due to a decline in the project-related homeland security
revenues. Operating profit margin in Government Services for the first
quarter of 2004 was 23.2 percent compared to 25.7 percent in 2003.
MARKETING SERVICES
- - In the first quarter of 2004, revenue excluding reimbursable expenses
decreased 11 percent from prior year revenue of $25.6 million to $22.8
million in 2004. Internal revenue also declined 11 percent. Total
revenue for the Marketing Services segment (which includes all
ChoicePoint Earnings
Page 4 of 10
of the Company's revenue from reimbursable expenses) decreased 2
percent from $36.5 million in 2003 to $35.7 million in 2004. The
Company excludes the revenue from reimbursable expenses in its
operational analyses because these items are fully reimbursed by our
customers without markup and have no impact on operating income, net
income, EPS, cash flows or the balance sheet.
- - Operating income in Marketing Services was $4.3 million for the first
quarter of 2004, down from $6.9 million in the prior year due
primarily to lower revenues. First quarter operating profit margin, as
a percentage of revenue without reimbursable expenses, was 18.8
percent (12.0 percent of total revenue) compared to 27.0 percent in
first quarter 2003 (18.9 percent of total revenue). Sequentially,
operating margins as a percentage of revenue without reimbursable
expenses have improved from the third (15.8 percent) and fourth (17.5
percent) quarters of 2003 as the business segment has implemented cost
controls to mitigate the impact of the revenue weakness.
OUTLOOK
Based on recent business trends, ChoicePoint continues to expect full year core
revenue growth in the 10 to 14 percent range, exclusive of the recently
announced Superior Information Services, LLC, Charles Jones, LLC and Service
Abstract Corp. acquisitions. Upon the consummation of these transactions,
ChoicePoint would expect full year core revenue growth to be in the 13 to 17
percent range, exclusive of any additional 2004 acquisitions. The Company
expects to achieve potential year-over-year operating margin expansion of up to
100 basis points based on these revenue assumptions and lower costs associated
with the cost reduction initiatives implemented in 2003. Any potential margin
improvement will be primarily realized in the latter half of 2004 since
Marketing Services and homeland security revenues generated strong margins in
the first half of 2003.
WEBCAST
ChoicePoint's first quarter results will be discussed in more detail on April
22, 2004, at 8:30 a.m. EDT via teleconference. The live audio Webcast of the
call will be available on ChoicePoint's Web site at www.choicepoint.com. There
will also be a replay of the call available beginning at approximately 10:00 am
EDT at the same Web address.
About ChoicePoint
ChoicePoint Inc. (NYSE: CPS) is the leading provider of identification and
credential verification services for making smarter decisions in a world
challenged by increased risks.
ChoicePoint Earnings
Page 5 of 10
Serving the needs of business, government, non-profit organizations and
individuals, ChoicePoint works to create a safer and more secure society
through the responsible use of information while ensuring the protection of
personal privacy. For more information about ChoicePoint, visit the Company's
Web site at www.choicepoint.com.
Forward-Looking Statements
Certain written statements in this release and oral statements made by or on
behalf of the Company may constitute "forward-looking statements" as defined
under the Private Securities Litigation Reform Act of 1995. Words or phrases
such as "should result," "are expected to," "we anticipate," "we estimate," "we
project," or similar expressions are intended to identify forward-looking
statements. These statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from those expressed in
any forward-looking statements. These risks and uncertainties include, but are
not limited to, the following important factors: demand for the Company's
services, product development, maintaining acceptable margins, ability to
control costs, the impact of federal, state and local regulatory requirements
on the Company's business, including the direct marketing and public records
markets and privacy matters affecting the Company, the impact of competition
and the uncertainty of economic conditions in general. Additional information
concerning these and other risks and uncertainties is contained in the
Company's filings with the Securities and Exchange Commission, including the
Company's Annual Report on Form 10-K for the year ended December 31, 2003.
Readers are cautioned not to place undue reliance on forward-looking
statements, since the statements speak only as of the date that they are made,
and the Company undertakes no obligation to publicly update these statements
based on events that may occur after the date of this press release.
ChoicePoint Earnings
Page 6 of 10
CHOICEPOINT INC.
Financial Highlights
(Unaudited) Three Months Ended
------------------------
March 31,
------------------------
(Dollars in thousands, except per share data) 2004 2003
-------- --------
Revenue from products and services (a) ................... $204,385 $184,005
Reimbursable expenses per EITF 01-14 (b) ................. 12,860 10,944
-------- --------
Total revenue ............................................ 217,245 194,949
======== ========
Cost of services ......................................... 110,771 99,786
Reimbursable expenses .................................... 12,860 10,944
Selling, general and administrative expenses ............. 39,343 32,416
-------- --------
Total costs and expenses ................................. 162,974 143,146
-------- --------
Operating income ......................................... 54,271 51,803
Interest expense ......................................... 526 1,006
-------- --------
Income from continuing operations before income taxes .... 53,745 50,797
Provision for income taxes ............................... 20,483 19,506
-------- --------
Income from continuing operations ........................ 33,262 31,291
Income from discontinued operations, net of taxes (c) .... -- 991
Gain on sale of discontinued operations, net of taxes (c) -- 32,893
-------- --------
Net income ............................................... $ 33,262 $ 65,175
======== ========
EPS - diluted:
Income from continuing operations ................... $ 0.37 $ 0.35
Discontinued operations, net of taxes ............... -- 0.01
Gain on sale of discontinued operations, net of taxes -- 0.37
-------- --------
Net Income .......................................... $ 0.37 $ 0.73
======== ========
Weighted average shares - diluted ...................... 90,368 89,374
======== ========
Operating Income ......................................... $ 54,271 $ 51,803
Depreciation and amortization expense .................... 13,535 13,391
-------- --------
EBITDA (d) ............................................... $ 67,806 $ 65,194
======== ========
ChoicePoint Earnings
Page 7 of 10
CHOICEPOINT INC.
Financial Highlights (continued)
(a) Revenue from products and services excludes revenue from reimbursable
expenses (see (b) below). The Company uses revenue from products and
services (also referred to as core revenue) to measure its continuing
operations without the effect of reimbursable expenses.
(b) Reimbursable expenses per Emerging Issues Task Force ("EITF") 01-14
represent out-of-pocket expenses fully reimbursed by ChoicePoint's
customers and recorded as revenues and expenses in accordance with
EITF 01-14 "Income Statement Characterization of Reimbursements
Received for 'Out-of-Pocket' Expenses Incurred". As these expenses are
fully reimbursed, without mark-up, by our customers and in a majority
of cases prepaid by the customers, there is no impact on operating
income, net income, EPS, cash flows or the balance sheet. In addition,
management excludes these expenses from its revenue analysis for
operational management and incentive purposes; therefore, we have
separately identified these expenses and excluded their impact in our
calculations of core revenue, internal revenue growth and operating
margins. Other pass-through expenses such as motor vehicle registry
fees will continue to be accounted for on a net basis and, as such,
excluded from revenues in our financial statements in accordance with
generally accepted accounting principles. First quarter pass-through
expenses totaled $162.3 million in 2004 and $150.0 million in 2003.
(c) On February 28, 2003, the Company sold its CPCS operating unit. The
pre-tax proceeds from the sale of CPCS were approximately $87 million.
CPCS is reported as a discontinued operation for all periods presented
and the results of its operations are reflected separately from the
results of continuing operations.
(d) Earnings before interest, taxes, depreciation and amortization
("EBITDA"), is not presented as a substitute for operating income, net
income or cash flows from operating activities. The Company has
included EBITDA (which is not a measure of financial performance under
generally accepted accounting principles) because such data is used by
the Company to compare its performance to its competitors and to
manage its on-going business and is also used by certain investors to
analyze and compare companies on the basis of operating performance.
ChoicePoint Earnings
Page 8 of 10
CHOICEPOINT INC.
Financial Highlights (continued)
(Unaudited) Three months ended March 31,
----------------------------
(Dollars in thousands) 2004 2003
-------- --------
CASH FLOW HIGHLIGHTS
Income from continuing operations .................................... $ 33,262 $ 31,291
Depreciation & amortization .......................................... 13,535 13,391
Changes in assets & liabilities and other ............................ (13,729) (13,516)
-------- --------
Net cash provided by operating activities of continuing operations ... $ 33,068 $ 31,166
Net cash used by activities of discontinued operations ............... $ -- $ (8,229)
Acquisitions & investments, net of cash acquired ..................... $(66,220) $(37,608)
Cash proceeds from sale of business .................................. -- 87,000
Capital expenditures ................................................. (12,697) (12,610)
Other investing activities ........................................... -- --
-------- --------
Net cash (used) provided by investing activities ..................... $(78,917) $ 36,782
Net cash provided (used) by financing activities ..................... $ 26,758 $(68,525)
KEY BALANCE SHEET HIGHLIGHTS 3/31/04
--------
Debt ........................................................... $ 72,090
Cash ........................................................... 4,319
--------
Debt (net of cash) ............................................. $ 67,771
Shareholders' Equity ........................................... $834,082
Days sales outstanding (adjusted for pass-through expenses) .... 41 days
ChoicePoint Earnings
Page 9 of 10
CHOICEPOINT INC.
2004 SEGMENT RESULTS
Q1 2004
--------
REVENUE
Insurance Services .................................. $ 86,727
Business Services ................................... 75,941
Government Services ................................. 17,741
Marketing Services .................................. 22,811
Royalty ............................................. 1,165
--------
Revenue from products and services .................. 204,385
Reimbursable Expenses per EITF 01-14 ................ 12,860
--------
Total Revenue ....................................... $217,245
========
OPERATING INCOME
Insurance Services .................................. $ 47,260
Business Services ................................... 14,357
Government Services ................................. 4,114
Marketing Services .................................. 4,287
Royalty ............................................. 204
Corporate & Shared Expenses (a) ..................... (15,951)
--------
Operating Income .................................... $ 54,271
========
CORE REVENUE GROWTH RATES
Insurance Services .................................. 13.9%
Business Services ................................... 18.9%
Government Services ................................. 3.5%
Marketing Services .................................. -10.8%
--------
Continuing operations ............................... 11.1%
--------
INTERNAL REVENUE GROWTH RATES
Insurance Services .................................. 12.2%
Business Services ................................... 13.3%
Government Services ................................. -12.8%
Marketing Services .................................. -10.8%
--------
Continuing operations ............................... 6.9%
--------
OPERATING MARGINS
Insurance Services .................................. 54.5%
Business Services ................................... 18.9%
Government Services ................................. 23.2%
Marketing Services .................................. 18.8%
--------
Operating income as a percentage of revenue
from products and services ...................... 26.6%
--------
Operating income as a percentage of total revenue... 25.0%
--------
(a) Corporate and shared expenses represent costs of support functions,
research and development initiatives, incentives and profit sharing
that benefit all segments.
ChoicePoint Earnings
Page 9 of 10
CHOICEPOINT INC.
2004 SEGMENT RESULTS
Q1 2003 Q2 2003 Q3 2003 Q4 2003 Total 2003
--------- --------- --------- --------- ----------
REVENUE
Insurance Services ...................... $ 76,134 $ 77,922 $ 78,100 $ 76,968 $ 309,124
Business Services(b) .................... 63,859 69,014 72,069 71,206 276,148
Government Services(b) .................. 17,136 14,778 15,011 16,410 63,335
Marketing Services ...................... 25,573 25,676 22,631 22,762 96,642
Royalty ................................. 1,303 1,389 1,305 1,105 5,102
--------- --------- --------- --------- ---------
Revenue from products and services ...... 184,005 188,779 189,116 188,451 750,351
Reimbursable Expenses per EITF 01-14 .... 10,944 10,470 12,402 11,579 45,395
--------- --------- --------- --------- ---------
Total Revenue ........................... $ 194,949 $ 199,249 $ 201,518 $ 200,030 $ 795,746
========= ========= ========= ========= =========
OPERATING INCOME
Insurance Services ...................... $ 42,436 $ 44,364 $ 43,998 $ 41,720 $ 172,518
Business Services(b) .................... 11,172 15,321 15,694 14,353 56,540
Government Services(b) .................. 4,399 3,264 2,958 3,919 14,540
Marketing Services ...................... 6,908 7,374 3,580 3,987 21,849
Royalty ................................. 646 626 416 380 2,068
Corporate & Shared Expenses(a) .......... (13,758) (16,469) (14,850) (12,936) (58,013)
--------- --------- --------- --------- ---------
Operating Income before other charges(c) $ 51,803 $ 54,480 $ 51,796 $ 51,423 $ 209,502
========= ========= ========= ========= =========
Other operating charges(c) ........... -- (19,817) (4,022) (7,103) (30,942)
--------- --------- --------- --------- ---------
Operating Income ..................... $ 51,803 $ 34,663 $ 47,774 $ 44,320 $ 178,560
========= ========= ========= ========= =========
CORE REVENUE GROWTH RATES
Insurance Services ...................... 18.7% 16.2% 10.8% 12.2% 14.4%
Business Services(b) .................... 11.9% 10.1% 18.9% 20.7% 15.4%
Government Services(b) .................. 42.4% 13.2% -19.6% -36.0% -8.7%
Marketing Services ...................... 7.8% -8.1% -17.6% -14.7% -8.7%
--------- --------- --------- --------- ---------
Continuing operations ................... 16.0% 9.6% 5.8% 4.1% 8.6%
--------- --------- --------- --------- ---------
INTERNAL REVENUE GROWTH RATES
Insurance Services ...................... 17.2% 15.0% 10.1% 9.5% 12.8%
Business Services(b) .................... -4.2% -5.8% 0.9% 5.0% -1.1%
Government Services(b) .................. 42.4% 13.2% -19.6% -36.0% -8.7%
Marketing Services ...................... -2.4% -13.6% -21.7% -18.7% -14.5%
--------- --------- --------- --------- ---------
Continuing operations ................... 8.1% 2.4% -1.2% -2.6% 1.5%
--------- --------- --------- --------- ---------
OPERATING MARGINS
Insurance Services ...................... 55.7% 56.9% 56.3% 54.2% 55.8%
Business Services(b) .................... 17.5% 22.2% 21.8% 20.2% 20.5%
Government Services(b) .................. 25.7% 22.1% 19.7% 23.9% 23.0%
Marketing Services ...................... 27.0% 28.7% 15.8% 17.5% 22.6%
--------- --------- --------- --------- ---------
Operating income before other operating
charges, percentage of revenue from
products and services(c) .............. 28.2% 28.9% 27.4% 27.3% 27.9%
--------- --------- --------- --------- ---------
Operating income as a percentage of
total revenue ......................... 26.6% 17.4% 23.7% 22.2% 22.4%
--------- --------- --------- --------- ---------
(b) In 2004, the Company reorganized its product lines in the Business &
Government segment into two separate reportable segments. Historical
information has been reclassified to conform with the current
presentation.
(c) The Company has presented analysis above with and without these items
because they represent costs that management excludes in its
assessments of operating results and in determining operational
incentive awards.
# # #