CoreLogic Reports Fourth Quarter 2010 Net Loss of $35.2 Million, or $0.30 Per Share, on Revenue of $394.5 Million

SANTA ANA, Calif., Feb. 24, 2011 /PRNewswire/ -- CoreLogic (NYSE: CLGX) today reported a net loss of $35.2 million for the quarter ended December 31, 2010 compared with net income of $38.0 million in the fourth quarter of 2009.  Diluted earnings per share were a loss of($0.30) in the fourth quarter of 2010 compared to income of $0.39 per share in the fourth quarter of 2009.  For the full year 2010, CoreLogic reported a net loss of ($74.7)million compared with net income of $199.7 million for the prior year.  Diluted earnings per share were a loss of ($0.67) in full year 2010 compared to income of $2.09 per share in full year 2009. Full year 2010 results include non-cash impairment charges of $14.5 million, non-cash gains of $3.4 million and losses from discontinued operations of $127.3 million.

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Anand Nallathambi, President and Chief Executive Officer, commented, "During the fourth quarter, CoreLogic achieved improved financial results and profitability in our core businesses, despite a significant decline in mortgage originations from a year ago.  In addition, CoreLogic had several significant accomplishments during 2010.  We separated from First American, improved our business mix, launched a series of significant cost reduction initiatives, completed several M&A transactions including the divesture of non-core businesses, and initiated a share repurchase program.  Together, we expect these actions will facilitate growth in per-share earnings over the foreseeable future.  Looking forward, we also expect our announced acquisition of RP Data Limited will improve our revenue growth trajectory through the addition of international risk and fraud analytics revenues."

Continuing on, Nallathambi added: "As global economic growth strengthens and financial reforms are formalized, we expect to benefit from the continued growth in demand for our credit risk management and fraud detection products and services.  During 2010 we achieved solid success in these areas with the implementation of patented fraud and income verification products at two major lenders. During the fourth quarter, we were also awarded four patents for fraud scoring and event monitoring methodologies.  We believe that continued innovation in these areas will power our long-term growth."

Regarding the company's balance sheet, Nallathambi said: "We initiated repurchases of our common shares under our previously announced $100-million buyback program.  This activity underscores the confidence we have in our future prospects as well as the strength of our balance sheet.  We believe our cash position, equity base, leverage and liquidity position will enable the company to continue to pursue additional growth and diversification initiatives."

FINANCIAL SUMMARY

(Unaudited)

(2) This is a non-GAAP measure. For a discussion and reconciliation of non-GAAP measures to the GAAP equivalent, see Reconciliations in the appendix.

BUSINESS SEGMENT RESULTS

(Unaudited)

(3) This is a non-GAAP measure. For a discussion and reconciliation of non-GAAP measures to the GAAP equivalent, see Reconciliations in the appendix.

Regarding the company's fourth quarter results, Nallathambi said: "Our fourth quarter 2010 business results show stronger profitability in our core businesses compared to a year ago despite a weaker mortgage origination market from the fourth quarter of 2009.  As expected, tax services benefited from a follow-through in volumes from the third quarter.  Flood and geospatial services grew partly as a result of our efforts to expand our presence in non-mortgage sectors.  In the Data and Analytics segment, the key growth drivers were the continued adoption of our risk and fraud detection products combined with customer-driven increases in credit reporting volumes.  Looking ahead to 2011, we see opportunities to build on these wins, as we bring to market new, integrated mortgage- and consumer-based analytical tools that will provide our clients with a more comprehensive 360-degree view of risk."

The following discussion compares the fourth quarters of 2010 and 2009 unless otherwise noted.

BUSINESS AND INFORMATION SERVICES

Adjusted EBITDA was $57.3 million in the fourth quarter, up 10% from $52.0 million in the year-ago period.  The increase was driven by growth in higher-margin flood and geospatial volumes as well as lower operating expenses in the segment.

Adjusted revenues from the mortgage origination services group decreased 3% to $133.3 million from $137.6 million as lower appraisal and tax servicing revenues were partially offset by growth in flood and geospatial services and national joint ventures.  Appraisal services revenues declined primarily due to lower appraisal volumes from a large customer during the fourth quarter.  Tax servicing revenues declined from the year-ago period, as a slower rate of deferred revenue recognition was partially offset by a higher number of new loans under tax service.  Adjusted revenues from flood and geospatial services benefitted from relatively high mortgage loan application volumes and the closing of several geospatial contracts.  Adjusted revenues from national joint ventures also increased as a result of strong loan application volumes. Adjusted revenues in the default and technology services group increased 1% to $103.6 million from $102.4 million as improved pricing and demand for our field services and outsourcing services more than offset a decrease in broker price opinions.

Adjusted EBITDA margin for the segment was 24%, up from 22% in the year-ago period.  Margin growth in the fourth quarter reflected an improved business mix more heavily weighted towards flood and geospatial services and national joint venture businesses and lower personnel expense and loss reserves requirements in our tax servicing business.  Lower reserve requirements resulted from improved recoveries on advanced property tax payments compared to the fourth quarter of 2009.

DATA AND ANALYTICS

Adjusted EBITDA was $45.8 million in the fourth quarter, up 5% from $43.8 million in the year-ago period.  This growth resulted from improved results in our credit services and risk and fraud product areas.  

Adjusted revenues for the segment were $174.8 million, compared with $158.9 million in the year-ago period.  Adjusted revenues in the risk and fraud analytics group increased 6% to $98.7 million from $93.0 million on higher mortgage application activity and growth in demand for new products.  Specialty finance group adjusted revenues increased 15% to $76.1 million from $65.9 million driven primarily by increased market share with a large customer and higher overall mortgage-related credit reporting volumes.

Adjusted EBITDA margin for the segment was 26%, down from 28% in the year-ago period.  Adjusted EBITDA margin in the risk and fraud analytics group declined to 29% from 30% reflecting increased product development and legal expenses.  Adjusted EBITDA margin in the specialty finance group decreased to 23% from 24% in the year-ago period, reflecting the impact of a lower-margin revenue mix and higher credit bureau fees in our credit reporting business.

LIQUIDITY AND CAPITAL RESOURCES

During 2010, CoreLogic repurchased 1.64 million common shares for $30 million.  As of December 31, 2010, CoreLogic had cash on balance sheet of $447 million, and total debt outstanding of $721 million.  Subsequent to the quarter, CoreLogic paid down the outstanding $200 million on its revolving credit facility, leaving the full $500 million available under the company's revolving credit facility as of February 24, 2011.

CoreLogic recently amended its credit agreement to increase the amount available for future share repurchases to $320 million and to remove all annual repurchase limitations.

ACQUISITIONS AND DISCONTINUED OPERATIONS

In November 2010, CoreLogic acquired a controlling interest in RealtyBid International, LLC, a leading online REO auction site for $12 million in cash.

On December 31, 2010, CoreLogic completed the sale of its employer and litigation services businesses.  Net proceeds of the sale, including expected tax benefits of $34.5 million, will be $299.5 million.  The results of these businesses are reported as discontinued operations for all periods presented.

Subsequent to the fourth quarter of 2010, CoreLogic announced an agreement with the independent board of directors of RP Data to recommend to RP Data shareholders the acquisition by CoreLogic of all of the outstanding shares of RP Data.

Subsequent to the fourth quarter of 2010, CoreLogic announced its intent to acquire the remaining non-controlling interest in former First American CoreLogic Holdings, Inc. for cash consideration of $72 million.  CoreLogic had previously agreed to complete this acquisition with its common shares.

Teleconference/Webcast

The CoreLogic management team will host a live webcast and conference call on Thursday, February 24, 2011, at 2:00 p.m. Pacific time (5:00 p.m. Eastern time) to discuss these results. All interested parties are invited to listen to the live event via webcast on the CoreLogic website at http://investor.corelogic.com. The discussion is also available through dial-in number 1-866-578-5784 for U.S./Canada participants or 617-213-8056 for international participants using Conference ID 65626409.

A replay of the webcast will be available on the CoreLogic investor website for 30 days and also through the conference call number 1-888-286-8010 for U.S./Canada participants or 617-801-6888 for international participants using Conference ID 99769810.

Additional detail on the company's fourth quarter and full year financial results is included in the quarterly supplement, available on the Investor Relations page at http://investor.corelogic.com.

About CoreLogic

CoreLogic is a leading provider of consumer, financial and property information, analytics and services to business and government. The company combines public, contributory and proprietary data to develop predictive decision analytics and provide business services that bring dynamic insight and transparency to the markets it serves. CoreLogic has built the largest and most comprehensive U.S. real estate, mortgage application, fraud, and loan performance databases and is a recognized leading provider of mortgage and automotive credit reporting, property tax, valuation, flood determination, and geospatial analytics and services. More than one million users rely on CoreLogic to assess risk, support underwriting, investment and marketing decisions, prevent fraud, and improve business performance in their daily operations.  Formerly, the information solutions group of The First American Corporation, CoreLogic began trading under the ticker CLGX on the NYSE on June 2, 2010. The company, headquartered in Santa Ana, Calif., has more than 10,000 employees globally with 2010 revenues of $1.6 billion. For more information visit www.corelogic.com.

Web Site Disclosure

CoreLogic posts information of interest to investors at http://investor.corelogic.com.

Certain statements made in this press release are forward-looking statements within the meaning of the federal securities laws, including but not limited to those statements related to the company's outlook, including overall financial performance, future growth, including earnings and revenue growth performance, the company's ability to pursue additional growth and diversification initiatives, the expected tax benefits of the sale of the company's employer and litigation services businesses, the strategy impact of the acquisition of RP Data, increased demand for products and services, new product development, and increased innovation and the impact thereof. These forward-looking statements may contain the words "believe," "anticipate," "expect," "plan," "predict," "estimate," "project," "will be," "will continue," "will likely result," or other similar words and phrases. Risks and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements are set forth in our Current Report on Form 8-K filed on June 1, 2010 and Part I, Item 1A of our most recent Annual Report on Form 10-K, as updated by our Quarterly Reports on Form 10-Q, including but not limited to:

• limitations on access to data from external sources, including government and public record sources;
• changes in applicable government legislation, regulations and the level of regulatory scrutiny affecting our customers or us, including with respect to consumer financial services and the use of  public records and consumer data;
• compromises in the security of our data transmissions, including the transmission of confidential information or systems interruptions;
• difficult conditions in the mortgage and consumer credit industry, the state of the securitization market, increased unemployment, and conditions in the economy generally;
• our ability to bring new products to market and to protect proprietary technology rights;
• our ability to identify purchasers and complete the sale of certain businesses on satisfactory terms or identify suitable acquisition targets, obtain necessary capital and complete such transactions on satisfactory terms or to realize any expected tax benefits from such transactions;
• risks related to our international operations;
• consolidation among our significant customers and competitors;
• impairments in our goodwill or other intangible assets; and
• the inability to realize the benefits of the spin-off transaction as a result of the factors described immediately above, as well as, among other factors, increased borrowing costs, competition between the resulting companies, increased operating or other expenses or the triggering of rights and obligations by the transaction or any litigation arising out of or related to the separation.

The forward-looking statements speak only as of the date they are made. The company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

Use of Non-GAAP Financial Measures

This press release contains certain financial measures that are not presented in accordance with Generally Accepted Accounting Principles (GAAP), including adjusted revenue which includes equity in earnings of affiliates; adjusted EBITDA and adjusted EBITDA margin which is adjusted to exclude historical corporate expense of the spun-off businesses and other adjustments, and adjusted pretax margin, which is adjusted to exclude net realized investment losses, employee separation costs and lease termination costs. Although these exclusions represent actual losses or expenses to the company, they may mask the periodic income and financial and operating trends associated with the company's business. To compensate for the inherent limitations of these non-GAAP measures, the company uses them in conjunction with the corresponding GAAP measures.  

The company is presenting these non-GAAP financial measures because the company believes that they provide the company's management and investors with additional insight into the operational performance of the company relative to earlier periods. The company does not intend for these non-GAAP financial measures to be a substitute for any GAAP financial information. In this press release, these non-GAAP financial measures have been presented with, and reconciled to, the most directly comparable GAAP financial measures. Investors should use these non-GAAP financial measures only in conjunction with the comparable GAAP financial measures.

(Additional Financial Data Follows)

RECONCILIATION OF AS REPORTED TO AS ADJUSTED FINANCIAL RESULTS FOR CONSOLIDATED CORELOGIC, INC.

*Includes income tax provision associated with equity in earnings of affiliates.

RECONCILIATION OF AS REPORTED TO AS ADJUSTED FINANCIAL RESULTS FOR LEGACY EMPLOYER AND LITIGATION SERVICES GROUP(1)

(1) CoreLogic closed on the sale of the employer and litigation services businesses on December 31, 2010.  Results of operations from these businesses are included in discontinued operations for periods presented.  Results from the marketing services businesses are shown in the company's Corporate group for periods presented.

RECONCILIATION OF AS REPORTED TO AS ADJUSTED FINANCIAL RESULTS FOR CONSOLIDATED CORELOGIC, INC.

RECONCILIATION OF AS REPORTED TO AS ADJUSTED FINANCIAL RESULTS FOR CONSOLIDATED CORELOGIC, INC.

RECONCILIATION OF AS REPORTED TO AS ADJUSTED FINANCIAL RESULTS FOR CONSOLIDATED CORELOGIC, INC.

RECONCILIATION OF AS REPORTED TO AS ADJUSTED FINANCIAL RESULTS FOR CONSOLIDATED CORELOGIC, INC.

RECONCILIATION OF AS REPORTED TO AS ADJUSTED FINANCIAL RESULTS FOR BUSINESS AND INFORMATION SERVICES

RECONCILIATION OF AS REPORTED TO AS ADJUSTED FINANCIAL RESULTS FOR DATA AND ANALYTICS

RECONCILIATION OF AS REPORTED TO AS ADJUSTED FINANCIAL RESULTS FOR CORPORATE AND ELIMINATIONS

RECONCILIATION OF AS REPORTED TO AS ADJUSTED FINANCIAL RESULTS FOR MORTGAGE ORIGINATION SERVICES GROUP

RECONCILIATION OF AS REPORTED TO AS ADJUSTED FINANCIAL RESULTS FOR DEFAULT AND TECHNOLOGY SERVICES GROUP

RECONCILIATION OF AS REPORTED TO AS ADJUSTED FINANCIAL RESULTS FOR RISK AND FRAUD ANALYTICS GROUP

RECONCILIATION OF AS REPORTED TO AS ADJUSTED FINANCIAL RESULTS FOR SPECIALTY FINANCE SOLUTIONS GROUP

SOURCE CoreLogic