Equifax, Inc.

Good day and welcome to the Equifax second quarter 2020 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jeff Dodge. Please go ahead.

Thanks and good morning, everyone. Welcome to today's conference call. I'm Jeff Dodge, and with me today are Mark Begor, Chief Executive Officer, John Gamble, Chief Financial Officer, and Trevor Burns with Investor Relations. Today's call is being recorded. An archived recording will be available later today in the Investor Relations section in the About Equifax tab of our website at www.equifax.com. During the call today, we will be making reference to certain materials that can also be found in the Investor Relations section of our website under Earnings Calls, Presentations, and Webcast. These materials are labeled Q2 2020 Earnings Release Presentation. 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 the filings with the SEC, including our 2019 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 our underlying operational performance. 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 Mark.

Thanks, Jeff, and good morning, everyone. Thanks for joining our second quarter earnings update. Businesses constricting consumers around the world continue to face challenges brought on by the COVID-19 pandemic. I hope you and your families are continuing to be safe and managing in this unusual environment. We'd like to once again thank the dedicated and selfless healthcare professionals, first responders, volunteers, and others around the world who are on the front line fighting this pandemic, and we sympathize with the millions of people in the U.S. and around the world that have been affected. The health impact of the COVID pandemic is devastating, but what is equally challenging to our customers is the unprecedented impact from the COVID pandemic that is unlike anything in our lifetimes with record unemployment, furloughs, and salary reductions. Data and analytics in this environment is more valuable than ever. During the second quarter, we operated very effectively in a work-from-home mode after COVID restrictions were put in place in late March. After shelter-in-place orders started to lift in early June, we opened up offices in markets like Atlanta and began to return to office on a 50% density and red-blue team rotational basis. Currently, we have 34 of 51 offices open and are operating in that mode. We expect to stay in the 50% density and in our red-blue rotational mode until a vaccine is available. We are operating at a very high level and have realized meaningful productivity and engagement with customers and across our Equifax team through video collaboration, including meeting all of our cloud technology, and data transformation milestones. Turning now to slide four, our financial results for the second quarter were very strong in our second consecutive quarter of double-digit revenue growth and margin expansion driven by workforce solutions, the U.S. mortgage market, and our positive performance in the marketplace. The results follow our momentum in the second half of 2019 and the strong first quarter and were well above our expectations. Our performance in the challenging COVID economic environment reflects the strength and resiliency of our business model, our differentiated data assets, including the twin income and employment data, telco utility and commercial data, and the value of data analytics in these unprecedented times. Revenue at $983 million was up 12% on a reported basis and 13% on a local and organic local currency basis, which is well above our expectations today. and above the framework of 3.5% to 5.5% that we shared with you in early June. If you adjust for the $48 million of incremental workforce solutions unemployment claims revenue in the quarter, our revenue increased a strong 8% in local currency. As the quarter unfolded in June, our revenue on all funds continued to improve from the trends we shared on the June 8th call as shelter-in-place orders lifted and economic activity improved. These strong results position us well as we move into third quarter in the second half. Our growth in the quarter was powered by our U.S. B2B businesses, USIS and Workforce Solutions. They both performed extremely well with combined U.S. revenue of 28% and a combined adjusted EBITDA margins of over 50%. Workforce Solutions revenue was exceptionally strong at about 53% and EBITDA margins were 56%. which was their strongest quarterly result since the acquisition almost 13 years ago and followed a strong first quarter in the second half of 2019. USIS revenue was up a strong 10%, which reinforced their return to a competitive market position. International revenue was down 15% in local currency, but continued to show broad-based sequential improvement throughout the quarter, and global consumer revenue was down just under 5%, principally in our U.S. partner business. Revenue growth throughout adjusted EBITDA at $353 million, up 19%, with an over 200 basis point expansion on our adjusted EBITDA margins to 35.9%, as we balance cost controls while executing our cloud data and technology transformation and making targeted investments in new products and data and analytics. Adjusted EPS of $1.60 a share was up over 14% despite incurring increased data analytics and incremental cloud costs of $0.12 per share and increased interest expense of $0.06 per share for our April bond offer. EBITDA and EPS were both above our expectations in the EPS framework of $1.22 to $1.32 we shared with you in early June. The very strong U.S. B2B revenue growth was driven principally by three factors. First, U.S. mortgage revenue was up over 70% versus 2019. It was extremely strong in the current record low interest rate environment as Equifax outperformed the overall mortgage market growth on the order of 30 percentage points, principally in workforce solutions. As you know, we over-indexed in mortgage versus our competitors due to workforce solutions in our U.S. tri-year mortgage business. U.S. mortgage market inquiries, our proxy for the overall mortgage market growth, were up 41% in second quarter versus our 70% combined growth in workforce solutions and USIS mortgage. Although USIS mortgage revenue growth of 44% grew 300 basis points above the mortgage market, the driver of the substantial outperformance versus the overall market was workforce solutions, where mortgage revenue more than doubled in the quarter, driven by the value of our unique twin income and employment data and new products, new customers, improved customer penetration, and the expansion of our twin database. We expect continued strong mortgage growth in the third quarter. Second, our unemployment insurance claims business, also part of Workforce Solutions, delivered more than 150% growth in the quarter to $76 million. Incremental revenue growth of $43 million in the quarter was driven by a significant increase in unemployment claims that we all know about during second quarter, which added five percentage points to overall Equifax revenue growth. As you know, Workforce Solutions processes close to one in five unemployment claims in the U.S. We expect unemployment claims to continue above 2019 levels in third quarter, but at a rate below the second quarter. Third, our U.S. B2B non-mortgage revenue, excluding unemployment insurance claims-based revenue, showed substantial improvement as we moved through the second quarter and was down only about 7%. Our U.S. B2B non-mortgage revenue, excluding U.S. UC claims impact, showed sequential improvements during the quarter from down 10% in April to down just 2% in June. As shelter-in-place restrictions were lifted, and economic activity improved, which reflects our competitive market position and provides good momentum going into third quarter. I'll provide more detail on these factors as we discuss each of our business units on slide five. Starting with USIS, their revenue was $366 million, was up 10% in the second quarter on a reported and organic basis, and their 12% first half revenue growth was their strongest since 2013. Mortgage revenue grew 44%, 300 basis points faster than the overall market inquiries that were up 41%, driven by new products, new customers, and pricing. Total mortgage revenue growth from both purchase and refi transactions strengthened significantly through the quarter, exiting June at over 60% above 2019. Total non-mortgage revenue, online and offline combined, decreased 7%, much better than expected when we entered the quarter at down 13% in April. And total non-mortgage revenue was down only 1% in June as economic activity improved sequentially during the quarter, which was above our expectation and a reflection of the USIS competitive position in the marketplace. For the quarter, online revenue was up 7%. Online non-mortgage revenue was down 10 in the quarter, but strengthened significantly during the second quarter, with June just down over 2% versus down 17% in April. In June, we had positive growth in auto, insurance, ID and fraud, and direct-to-consumer, with commercial declining high single digits as U.S. economic activity improved. Telco and banking were both down mid-single digits in June and showed improvement during the quarter, Banking remains down as customer marketing continues to be at a reduced level until the direction of the economy and the consumer becomes clearer. Mortgage Solutions, our mortgage and tri-year business, was up 44% in the quarter, outgrowing the market by 300 basis points from new products, new customers, and pricing. Financial Marketing Services revenue was up 1% compared to last year and better than our expectations. Risk decisioning, which includes portfolio review revenue and makes up over 30% of total financial marketing services, was up over 15% in second quarter as companies expanded their portfolio review activities. Marketing revenue, which also makes up about half of FMS in the quarter, was down just under 20%. The remainder of FMS, which includes our IBM collections products, was up over 25% in the quarter. These general trends are consistent with our expectations. However, portfolio review revenue was stronger than expected. We expect portfolio review activity to remain strong as customers manage challenging customer collections and take proactive portfolio management actions. We are also starting to see increased activity from customers for our marketing services as the quarter ended, although at much lower levels than in 2019. USIS is winning competitively and continues to accelerate commercial activity, and their new deal pipeline remains strong. USIS's new deal pipeline opportunities as of the end of June was at their largest level since 2017, up almost 10% over last year. Equally positive, USIS's win rates in the quarter were up over 300 basis points from last year. USIS's new deal pipeline growth and win rates were both both above our expectations and reflects Fidsing's commercial focus and leadership as USIS returns to market competitiveness. USIS's adjusted EBITDA margins of 44.1% were down 150 basis points from last year and down 60 basis points sequentially. The decline is principally driven by the higher mix of lower margin mortgage revenue and resulting higher royalty costs and data purchases than with our non-mortgage online revenue. USIS also continued to invest in commercial resources and MPI resources during the quarter for future growth. Following USIS's commercial momentum in the second half of 2019 and strong above-expectation results in first and second quarter, we are confident that Sid Singh's leadership has moved USIS back into a competitive position in the U.S. market. Shifting to workforce solutions, they had another exceptional quarter with revenue of $353 million, up 53%. This was the strongest revenue growth since we acquired Toxin 2007. EWS results were up a strong 33%, excluding the $48 million of incremental UC claims revenue in the quarter. Trailing 12-month revenue was $1.15 billion, up 32%, with 49.6% EBITDA margins, up 350 basis points. Rudy Floder and his EWS team gave you a deep dive on our EWS business and growth outlook in early June. They continue to leverage core growth, new products, penetration, pricing, new verticals, and record additions to fuel their growth. EWS is on track to be well over a billion dollars of revenue in 2020 for the first time with 50% plus margins. Workforce Solutions is clearly our strongest business, particularly in this unprecedented consumer environment where twin income and employment data is immensely valuable. Verification services revenue of $252 million was up 46% versus 2019. Verification services mortgage revenue more than doubled in the quarter going more than 60 percentage points faster than the 41% growth we saw in the mortgage market credit inquiries in the quarter. This dramatic outperformance relative to the overall mortgage market is driven by the strategic and operational focus on new products, penetration, usage, and record additions that we discussed in our June investor call. As a reminder, the presentation from our June call is available on the Equifax website. Several growth levers are driving this outperformance of verification services mortgage revenue relative to the overall mortgage market, including growth in twin contributor and records. During the quarter, the number of companies contributing to the twin database increased substantially to over 900,000 from over 700,000 in March and 37,000 a year ago. As we expand into more mid and smaller market companies, Due to this growth in new contributors, Workforce Solutions was able to offset the negative impact on active twin records of increasing unemployment. Total active records were 105 million at the end of the quarter, with over 80 million unique individuals, which is just over 50% of the U.S. nonfarm payroll. Total active records were up over 15% from a year ago, but Flatwood marched through the impacts on the database from unemployment. The twin database now includes about 435 million active and inactive records, and as you know, we are able to monetize both active and inactive twin records. In addition to growth in employer contributors and overall twin records and a focus on adding new customers, several new critical strategies have been important components of driving the verification service mortgage revenue growth in excess of the overall mortgage market. First, Direct-to-consumer integrations with mortgage underwriters continues to grow with the work number integrated directly into our customers' underwriting processes. These integrations increase the usage of twin records and the frequency of twin polls in the mortgage origination, underwriting, and closing process, which drives twin verification revenue. Second, new products focus on increasing the number of times that twin income or employment verification is used during the mortgage application approval process. We share some of the new solutions we are bringing to the marketplace that drive twin usage and provide value to our customers with you and the June call. And many of these products have pricing that is two to four times our base twin pull cost. Number three, expanding real-time access to additional income sources to include the increasing number of people that work as individual contractors or 1099 self-employed consumers. to deepen and broaden the twin database beyond non-farm payroll. Shifting the verification services non-bortgage revenue growth, it was down less than 5% in second quarter and delivered 2% growth in June. The decline in the quarter was driven by substantial weakness in talent solutions, our hiring-related services business, where companies across the U.S. cut back on hiring during the quarter, and in debt management services where temporary reductions in collections activity were implemented by many companies. Partially offsetting this were new product rollouts in talent solutions, strength in government verticals related to government health care and support services, as well as the growth in records in the twin database. We also saw growth in the second quarter in auto through increased twin penetration with auto loan originators and increased use of twin with higher credit score applicants. We also saw growth in our twin ID product and in portfolio review product solutions, principally for card and personal loans, which we expect to continue to grow in the second half, given the unique value of income and employment data in the current environment. Employer services revenue of $101 million increased a strong 75% in the quarter, driven by our unemployment claims business, which grew over 150% versus last year to $76 million. Adjusting for the $48 million of incremental UC claims revenue in the quarter, employer service was down about 8% as companies cut back on hiring. As a reminder, our UC businesses manage the process of providing the required unemployment data to state and local agencies for employers. Our typical contract is an annual subscription with volume limits and incremental fees as UC claims are above those limits. We operate in all 50 states, Washington, D.C., Puerto Rico, and U.S. Virgin Islands. In the second quarter, Workforce Solutions processed about 7.5 million claims, which is roughly one in five initial U.S. claims during the second quarter. Claims spiked in April and May to about 5.8 million for a monthly run rate of 300,000 per month in the first quarter. In June, we saw a steady decline in new clients from the elevated April and May rates to 1.7 million claims processed for the month, which was still up dramatically over pre-COVID in 2019 levels. The remainder of employee services saw revenue decline 17% in second quarter because of lower new employee hiring activity in the quarter. I-9 and onboarding in our workforce analytics business make up the bulk of the remainder of employer services. We saw 9% growth in our I-9 and onboarding business, which partially offset the declines in workforce analytics and our tax services business. The strong EWS verifier revenue growth resulted in adjusted EBITDA margins of 56.3% in the quarter, which was a record for Workforce Solutions, and an expansion of 710 basis points versus last year. The strong margin growth was partially offset by incremental costs incurred in the quarter for new twin records. Workforce Solutions is clearly our most differentiated business with their unique twin income and employment records. The twin data assets are increasingly valuable in this COVID consumer environment where verification of income and employment is critical. As we discussed in June, we think about EWS being in the second or third inning with multiple growth levers for future growth in 2021 and beyond. International revenue of $181 million was down 15% in local currency and down 21% on a reported basis and in line with our expectations. COVID shelter-in-place orders have been deeper and longer in our international markets, with some markets, including Australia, the U.K., and Canada, still not open. This has impacted their revenue, but we've seen sequential revenue improvements from down 20% in April, improving to down 7% in June. Asia Pacific, which is our Australia, New Zealand, and India business, delivered second-quarter revenue of $65 million, down 9% in local and 10% in organic local currency, versus last year. The revenue growth was much stronger than the revenue trends at down 20% we experienced in April, as revenue trends continued to improve with June down 4%, adjusted for a large collections deal that closed late in the second quarter. In Australia, revenue growth in fraud and ID and collections partially offset declines in our consumer and marketing services businesses into a lesser degree in our commercial business. European revenues of $48 million were down 25% in local currency in the quarter. Our European credit business was down about 20%, with Spain performing slightly better than the U.K. In the U.K. credit business, revenue improved meaningfully during the quarter from down 27% in April, but they were still down 15% in June as the U.K. is still in a lockdown. Spain credit revenue also improved during the quarter from down 21% in April to but was still down 9% in June as shelter-in-place orders have just begun to be lifted a few weeks ago. Our European debt management business declined 34% in local currency as expected, principally driven by government-enacted policies that temporarily halted consumer debt collections. We expect debt collection activity to resume in the second half. Latin American revenues of $34 million decreased 14% in local currency in the quarter, Our two largest markets in Latin America, Chile and Argentina, make up over 50% of the revenue. Importantly, these two markets performed relatively well in the quarter, with Chile down 6% and Argentina down 10% in local currency compared to last year. April revenue declines for Chile and Argentina were elevated levels given COVID lockdowns. However, June revenue declines were in the low to mid-single digits. These markets continue to benefit from the expansion of Ignite and interconnect SaaS customer rollouts and strong new product introductions in those past three years. Most of our other Latin American markets were down over 20% consistently through the quarter from the economic impact of the strong COVID lockdowns in those markets. Canada revenue of $33 million declined 13% in local currency in the second quarter. Revenue improved from a decline of about 25% in April to down only about 1% in June as economic activity improved but shelter-in-place orders still have not been fully lifted in many parts of Canada. Fraud and ID revenue grew in the second quarter from higher government volumes associated with increased applications for government social services, and we saw growth in June revenue in our mortgage, auto, and small business verticals in Canada. International adjusted stock margins of 21.7% were down 690 basis points from last year, principally reflecting the lower revenue across all regions, partially offset by cost savings achieved during the quarter. Global consumer solutions revenue was down 5% on a reported and local currency basis in the quarter. Our global consumer direct business, which is just under half of our GCS business, was down about 3%. Our U.S. consumer direct business had revenue decline of about 5% versus 2019, but increased sequentially from the first quarter by about 200 basis points. Canada and the U.K. combined consumer direct revenue was about flat in the quarter. Importantly, we are seeing substantial subscriber growth in the U.S. and Canada, our two largest markets. Based on a continuation of these trends, we expect our consumer direct business to show positive revenue growth in the second half, which would be our first growth since 2017 in this market segment. GCS also continues to grow with my Equifax member base with over 6 million consumer members, up from about 2 million a year ago, which provides a foundation for new product offerings. Our remaining GCS business, principally our partner business, as well as our benefits channel and events-based business, decreased by 5% in the quarter. We delivered high single-digit growth in our benefits channel, and events-based business, but this growth was more than offset by declines in our U.S. lead-gen partner business as banks pulled back on card and P-loan marketing and originations. As we look to the second half of 2020, declines in our U.S. lead-gen partner revenue are likely to accelerate as consumer marketing remains at reduced levels, more than offsetting the expected growth in global consumer direct, our benefits channel, and events-based business. This will likely result in second-half revenue declines in GCS at greater than the 5% decline we delivered in the second quarter. GCS adjusted EBITDA margins at 20.8%, decreased 210 basis points compared with the prior year due to the effect of revenue decline partially offset by operating cost efficiencies. In what has been the most challenging economic and health environment we've faced in our lifetime, Equifax delivered a very strong performance with revenue up 12%, and adjusted EBITDA to EPS of 14% in the first half. Our resilient business model, differentiated data assets, cloud data and technology transformation, new products, and focus on commercial execution has driven our broad outperformance. Our U.S. B2B businesses, USIS and EWS, delivered mortgage revenue growth that outperformed the overall mortgage market, substantial growth in our UC revenue, and improving revenue trends across our non-mortgage businesses, the U.S. and international, drove our results. Shifting now to slide six, this page highlights the uniqueness and challenges of the current COVID recession. It is clear that this is the most challenging consumer environment in our lifetime. Compared to the 08-09 global financial crisis, unemployment rates are up almost 500 basis points with over 20 million Americans out of work. And for the 10% of Americans with negative wage impacts, their wages are down 5% to 6%, with many households struggling to manage 25% or more salary reductions, or even larger if they're in a furlough. These unprecedented consumer impacts significantly cloud the ability for our customers to manage their business, including marketing, underwriting, and portfolio management. We've seen a significant performance deterioration of prime and near-prime credit portfolios driven by these job losses and wage reductions. Many predict a continuation in job losses or wage reductions as government support programs expire in the coming weeks. In April of this year, approximately 50% of those who suffered a decrease in pay in excess of 25% were individuals with a credit score of 680 or higher, which further complicates the environment for our customers. Forbearances are also driving material loss of predictiveness of traditional credit scores in the subprime market. And further, the CARES Act, with the CARES Act, loan accommodations keep delinquency rates artificially low and make them not representative of the actual portfolio health. accommodations have grown from 2.8% pre-COVID in March to 9% at balance of today. In these challenging times, differentiated data is more valuable than ever. We're seeing a meaningful increase in customer discussions in this unique environment about data solutions broadly, but with a particular focus on our unique twin income and employment data, which is sourced every pay-per-use. Turning now to slide seven, we updated the comparison of our performance in the current COVID pandemic-driven recession to our performance in the 08-09 global financial crisis. Based on the growth of Workforce Solutions and our U.S. mortgage business, we are seeing significantly stronger performance in the current COVID recession with our 13% revenue growth in the second quarter than in the early stages of the 08-09 global financial crisis where Equifax revenue was down 7-10% quarterly during that recession. The key drivers of our strong outperformance relative to 08-09 include our resilient business model and stronger mix of businesses, with 55% of Equifax delivering growth or counter cyclical performance in 2020, versus only 40% in 08-09. Second, U.S. mortgage revenue is at very high levels, with rebuy and purchase transactions continuing historic levels driven by record low interest rates. We saw mortgage application purchase volume rebound as we exited second quarter, as consumers take advantage of record low interest rates. The MBA application purchase index was up 15% versus 2019 in the last week of June. This strength continued into July. Based on current rates, over 15 million existing mortgages would benefit from refinancing, which is up about 70% higher than the available refi population in 08-09. John will give you some further perspectives on the second half U.S. mortgage market outlook shortly. Mortgage is clearly much stronger today with revenue in the second quarter rising for Equifax up over 70%, which is significantly higher than the 20% peak revenue growth we delivered during 08-09. Third, Workforce Solutions' growth has been accelerated from record growth, penetration, new products, and new verticals. Their 53% growth in second quarter significantly outperformed their peak quarterly growth performance of about 20% in the 08-09 global financial crisis. In addition to growth and verifications of 46%, the unemployment claims process in business It's seen record volumes, resulting in the $48 million of incremental UC revenue in the second quarter I talked about earlier. And then last, our commercial momentum from the second half of 2019 and strong first quarter performance as we entered the COVID environment in late March is clearly also driving our results. The Equifax business model and recession resiliency is clearly much stronger than the last recession in 08-09. I'll turn the discussion over to John to discuss recent trends in revenue on our underlying markets as well as review some of our other financial items. But looking at trends at a high level, USIS and Workforce Solutions mortgage revenue continues to be very strong and relatively stable at the elevated levels we saw in June. While we expect mortgage revenue growth rates on a year-over-year basis to remain strong in the second quarter, we do expect growth rates in the third quarter and second quarter to decline versus second quarter as we saw strong growth in mortgage markets in the second half of 2019. In USIS, the improvement in non-mortgage revenue has flattened over the past few weeks after consistent sequential improvement throughout the second quarter. And in some markets and verticals, we started to see some slight declines in the last few weeks as COVID case counts increased and some shelter-in-place orders returned. In workforce solutions, verification services trends in non-mortgage revenue remain slightly positive for our trends, driven by the strategic dynamics of the business and new products rollouts, as we discussed earlier. Workforce solutions unemployment insurance claims revenue remains at elevated levels at a run rate of over $40 million for the quarter, which is, while positive for 2019, will be substantially lower than the unemployment claims. We expect it to be substantially lower than the unemployment claims volume we saw in the second quarter. And given the continued uncertainty regarding the direction and pace of the U.S. and global economy, we do not expect to provide guidance throughout the remainder of 2020. As we did last quarter and in June, we'll provide details on the trends we are seeing and an indicative view of their implications. After John's discussion, I'll come back and review our progress on the technology transformation, new products, and our focus on the second half in 2021. John? Thanks, Mark. I'll generally be referring to the results. from continuing operations represented on a GAAP basis and on a non-GAAP basis. In the second quarter, general corporate expenses was $122 million, excluding non-recurring costs. Adjusted general corporate expense for the quarter was $75 million, up $8 million from 2019. Corporate function expenses, such as finance, HR, legal, are down year-to-year, reflecting the cost containment activities Mark discussed in April. The increase in total general corporate expenses primarily due to higher incentive compensation costs in 2020 due to the very strong financial performance, as well as increased appreciation and amortization. We continue to exercise disciplined cost management across the business. We are and will continue to invest in our technology transformation, data and analytics, new products and security, and will accelerate investment in these areas if we believe we can deliver accelerated benefits. Outside of these areas, headcount additions are being held at levels below attrition. and discretionary spending has been reduced. Across the company, business travel remained at virtually zero. We're in the process of reviewing our real estate footprint, as well as other areas that may allow further structural cost improvements. We expect to begin implementing cost improvement items over the next several quarters, but do not expect meaningful cost improvements in 2020. For QQ20, the effective tax rate used in calculating adjusted EPS was 24.4%, and about 1% higher than we expected for the quarter. We expect the 3Q20 tax rate to be about 21%. Full-year effective tax rate used in calculating adjusted EPS is expected to be about 24%. In 2Q20 and year-to-date, operating cash flow of $251 million and $282 million, respectively, are both up $34 million from 2019. Increases in operating cash flow in 2Q20 and first half 20 were partially offset, by $48 million and $95 million of legal settlement payments in 2020 and year-to-date, respectively. The timing of payments of the remaining $347 million to the U.S. Consumer Restitution Fund is principally dependent on the resolution of the appeals filed related to this case. At this time, we do not expect to fund the remainder of the settlement until late 2020 or early 2021. Our liquidity and balance sheet remains strong. As indicated on slide 8, we had almost $2.7 billion in available liquidity at June 30th, including $1.4 billion in cash and available borrowing capacity on our bank credit NAR facilities of $1.3 billion. As Mark mentioned, our 2Q results were substantially stronger than the implication of the trends through May that we discussed in our June investor call. The improved results were about 70% in our U.S. B2B business, with the bulk of the remainder in international, broad-based across our geographies. In U.S. B2B, online was about two-thirds of the improvement, split evenly between mortgage and non-mortgage. The remainder was strength in USIS financial marketing services and workforce solutions unemployment insurance claims business. The strength in adjusted EPS reflects the margin impact and the stronger revenue. Slides 9 through 12 show details of revenue trends on a local currency basis that we saw in one Q&T queue as well as in April, May, and June. There were two more business days in June this year versus 2019, which benefited growth rate on the order of 3%. We are also providing a view of the trends so far during the month of July and their implications on 3Q20 if they were to continue throughout the quarter. The line items for which daily trends are not available or not relevant, we did not provide monthly actuals, but did provide 1Q and 2Q data as well as an estimate for 3Q20. The monthly actuals provided should be viewed as directional. Starting with slide 9, U.S. B2B revenue trended very positively through June as online strengthened across USIS and EWS, driven by strength in mortgage online and improving trends in non-mortgage online revenue. This, coupled with a very strong QQ performance in Workforce Solutions' unemployment insurance claims business and the growth in USIS financial marketing services, a much better performance than yet expected, resulted in a very strong U.S. B2B revenue growth in QQ. Trends in U.S. online over the past month have approximately flattened. Online mortgage daily revenue levels continue to be strong but are somewhat variable by week and have been about on average consistent over the past month. The July trends for mortgage reflect a continuation of the current daily revenue trend adjusted for seasonality with a lower growth rate due to significant increase in mortgage revenue we saw last year in 3Q and 4Q. Online mortgage revenue online non-mortgage revenue growth was flattened over the past month. USIS non-mortgage online revenue growth levels have shown slight declines, while EWS non-mortgage revenue has remained relatively flat. July trends provided for online non-mortgage revenue reflect these trends. Workforce solutions and employer services, driven by unemployment insurance claims activity, is expected to show growth in 3Q again, but at levels much lower than in 2Q. USIS financial marketing services in 2Q benefited from new business both in portfolio review and marketing services. Given the uncertainty in the economy, the mid-July estimate provided for USIS marketing services does not assume that this recurs again. In total for USD to B, if the trends and assumptions hold for 3Q, we should see another very strong quarter. Turning to slide 10, as Mark discussed earlier, international saw improvements in all regions as we moved through 2Q, with June revenue down only 7% versus 2019. This consistent improvement across all regions resulted in a much smaller revenue decline in the quarter than anticipated. The July revenue growth trend shared reflects, in general, a continuation of the daily revenue trend seen over the past month through the rest of the third quarter. July trends share with you reflect the trends Mark discussed earlier. In consumer direct, growing total subscribers are expected to lead to slight revenue growth in 3Q. Partner revenue, which includes our benefits channel and event-based business, is expected to decline about 10% in 3Q, with a significantly larger decline likely in 4Q. As Mark mentioned, GCS total revenue in second half 20 is expected to decline by more than 5%. with a decline in 4Q much larger than 3Q due to expected significant declines in lead gen-related partner business. Slide 11 provides a comparison of economic factors impacting the mortgage market in the current environment during the 08-09 financial crisis and the 13-14 mortgage downturn. We are sharing this information to provide you with additional information for your use if you estimate Equifax second half 20 results. Based on data provided by Black Knight, at current 30-year mortgage rates of about 3%, there are over 18 million mortgages likely eligible for refinance. This is the highest level we have seen over the past year and much higher than 2008 through 10 or 2013 and 14. The refi potential is highly dependent on a number of factors, including interest rates. For example, again based on Black Knight data, an increase in the 30-year fixed mortgage rate to 3.5% would reduce refi potential to 10 million. and an increase to 4% in the interest rate would reduce the refi potential to under $5 million. As you saw last week, mortgage rates at an all-time low of just under 3%. Current U.S. unemployment at 11% is higher than we saw in either 2008 through 10 or 2013 through 14. The forecast for unemployment in second half 20 that is provided in this chart is by Moody Analytics. In addition, we'll continue to watch key metrics including mortgage delinquency rates, credit scores, Leverage levels, both in terms of debt-to-income and loan-to-value closely, as it is still early in the current crisis, and the impact on consumer employment income and the direction of ongoing government support are still evolving. Due to the continuing uncertainties in forecasting the direction, depth, and duration of the recession and related to the actions to combat COVID-19, we're not going to provide third-quarter guidance and do not expect to provide guidance for the remainder of 2020. However, for perspective on total Equifax 3Q20 performance, we will again provide an illustrative third-quarter framework to help you think about our performance. Please turn to slide 12. To the extent total Equifax revenue continued at the pace I described earlier, 3Q20 revenue would be up 4% to 6% year-to-year, resulting in 3Q20 revenue of $930 to $950 million. Adjusting EPS in 3Q20 at these revenue levels could be in the range of $1.30 to $1.40 per share, down 6% to 12% from 3Q19. Slide 19 also provides a walkthrough explaining the translation versus 3Q19 of the revenue growth to the decline in pre-tax income and therefore adjusted EPS. Importantly, at these adjusted EPS levels, Equifax will deliver over $325 million in adjusted EBITDA. This is not guidance, as there is still much uncertainty as to what impact the pandemic will have on the economy, our customers, business activity, the path to opening the economy, and therefore our revenue and earnings. This range provided reflects current variability and trends, not a view of potential quarter outcomes. As a reminder, in our April earnings call, we provided detail on the cost and capital spending savings we expect to generate, and the tech transformation is completed. As shown on slide 13, total cost savings, excluding V&A, are expected to be on the order of $125 million from the reduction of cost of goods sold and lower development expense.