TALX Reports 35% Growth in Fourth-Quarter Diluted Earnings Per Share from Continuing Operations, to $0.35, Excluding One-Time Merger-Related Expenses of $0.06 Per Share

Business Wire, May 9, 2007

ST. LOUIS -- TALX Corporation (NASDAQ: TALX) today reported that fiscal fourth-quarter diluted earnings per share from continuing operations increased 35 percent to $0.35, excluding expenses of $1.7 million (or $0.06 per share) related to the previously announced merger with Equifax, Inc., compared to $0.26 per diluted share a year ago. Including the $0.06 per share merger-related expenses, diluted earnings per share from continuing operations for the 2007 fiscal fourth quarter were $0.29. Additionally, the 2007 fourth-quarter results included share-based compensation expense of $0.02. The 2006 fourth quarter was not impacted by Statement of Financial Accounting Standards No. 123r (SFAS 123r), "Share-based Payment." The improvement in earnings from continuing operations to $11.3 million, excluding the merger-related expenses discussed above, from $9.0 million reflected strong performance in The Work Number[R] services and tax management services, as well as contributions from the talent management services business acquired early in fiscal 2007. Results also benefited from the company's ongoing emphasis on cost control, as demonstrated by the rate of increase in gross profit outpacing the year-over-year revenue increase. See attached "Supplemental Financial Information" for a reconciliation of differences from the comparable GAAP measures.

Fourth-quarter revenues increased 23 percent to $73.7 million from $60.0 million the year before. The Work Number services' revenues rose 22 percent, and revenues for the tax management services business increased 9 percent from year-ago levels. The 2007 fourth quarter also benefited from $5.3 million in revenues from the company's April 6, 2006, acquisition of Performance Assessment Network, Inc., or pan.

Gross profit for the fourth quarter expanded 26 percent to $46.9 million from $37.3 million. Gross margin improved 150 basis points to 63.7 percent from 62.2 percent the year before, despite the impact of expenses related to share-based compensation, which negatively affected gross margin by 26 basis points in the 2007 fourth quarter. Gross profit for The Work Number services increased 23 percent to $24.6 million from $20.1 million. Gross profit for the tax management services business rose 19 percent to $20.1 million from $16.9 million, and gross profit for talent management services was $2.1 million.

Revenues for the full year increased 30 percent to $270.6 million from $207.4 million the year before. Earnings from continuing operations for the period were $35.5 million, or $1.08 per diluted share, excluding expenses of $1.7 million (or $0.05 per share) related to the previously announced merger with Equifax. Including the $0.05 per share merger-related expenses, diluted earnings per share from continuing operations were $1.03. Fiscal 2007 results include share-based compensation expense of $0.09. In the year-ago period, earnings from continuing operations were $30.0 million, or $0.89 per diluted share. Fiscal 2006 was not impacted by SFAS 123r.

William W. Canfield, president and chief executive officer, commented, "We achieved record revenues across all our business units for both the fourth quarter and full year, as we continued to provide clients with electronic, easy-to-use solutions to simplify HR and payroll processes. In The Work Number, record revenues resulted from increased transactions and from the seasonal effect of our electronic W-2 business. In addition, we are set to roll out our new One Stop Verifications Service to additional verifiers, based on the positive results that we have experienced in the pilot. Our clients' feedback has confirmed the value of their seamlessly obtaining verification information through us as their trusted verification partner even when the applicant's information isn't currently in The Work Number database.

"In our unemployment tax management services segment, as a result of continued emphasis on streamlining our operations, together with a 6 percent organic revenue gain this quarter, we achieved a 370 basis point improvement in gross margin compared to a year ago. In our tax credits and incentives business, we benefited this quarter from additional revenues related to the reinstated Welfare to Work and Work Opportunity tax credits. These higher revenues drove the 880 basis point improvement in gross margin in this segment compared to a year ago.

"In our talent management services segment, revenues related to the contract with the U.S. Department of Homeland Security rebounded, as the Transportation Security Administration ramped up hiring activity by the end of the quarter."

L. Keith Graves, chief financial officer and president of tax management services, pointed out, "Along with record operating income of $22.2 million in our fiscal fourth quarter, TALX achieved record cash flow from operations for fiscal year 2007 of $69.0 million - 75 percent higher than fiscal 2006. Our strong cash flow from operations in fiscal 2007 allowed us to increase capital spending to $23.4 million, repurchase $32.0 million of TALX common stock, and pay down debt by $25.8 million. Additionally, we increased our dividend payments by more than 50 percent compared to fiscal year 2006."