CoreLogic Reports Second Quarter 2015 Financial Results

Revenue Growth and Cost Management Programs Drive Higher Margins and EPS

- Revenues up 5.5% to $386.0 million fueled by 8.0% growth in Technology & Processing Solutions (TPS) revenues. Data and Analytics (D&A) revenues up 5.8% on a constant-currency basis.

- Operating income from continuing operations up 48.0% to $60.7 million reflecting the benefits of revenue growth, favorable business mix and cost management.

- Net income from continuing operations up 23.4% to $33.0 million. Diluted EPS increased 24.1% to $0.36. Adjusted EPS rose 41.0% to $0.55.

- Adjusted EBITDA up 21.1% to $117.8 million; adjusted EBITDA margin up 390 basis points to 30.5%.

- Repurchased 1.5 million common shares.

- 2015 Financial guidance increased to reflect first half results, projected impact of cost management initiatives and updated view on U.S. mortgage origination unit volumes.

Jul 23, 2015, 16:15 ET from CoreLogic

IRVINE, Calif., July 23, 2015 /PRNewswire/ -- CoreLogic (NYSE: CLGX), a leading global property information, analytics and data-enabled services provider, today reported financial results for the quarter ended June 30, 2015.

"CoreLogic delivered another strong operating performance in the second quarter.  We grew revenues and gained market share in a number of our core operations.  We also continued to invest in our NextGen technology platform and in our product and service development," said Anand Nallathambi, President and Chief Executive Officer of CoreLogic.  "As we move forward, we are squarely focused on enabling and accelerating the growth of our unique underwriting, compliance and risk management-related solutions which are powered by our industry-leading property data, analytics and data-enabled workflow tools and platforms."

"In addition to top-line growth, we expanded adjusted EBITDA margins to over 30% in the second quarter.  Higher margins were the result of favorable revenue mix, operating leverage generated by our mortgage-related businesses and cost management," added Frank Martell, Chief Operating and Financial Officer of CoreLogic.  "The durability of our business model allows us to continue to invest in our products and services, technology leadership and operational improvements and, at the same time, return significant amounts of capital to our shareholders and manage our debt balances."

Second-Quarter Financial Highlights Second quarter revenues totaled $386.0 million, up 5.5% (7.2% on a constant-currency basis) from prior-year levels, as higher U.S. mortgage origination volumes, market share gains in core underwriting solutions and demand for property data and analytics drove improved results.  TPS revenues increased 8.0% year-over-year to $214.0 million driven primarily by higher demand for mortgage-related underwriting solutions and market share growth in our payment processing, flood services and credit services units.  D&A revenues were $174.6 million, up 2.2% (5.8% on a constant-currency basis) compared with the prior year.  Higher D&A revenues were driven principally by growth in insurance, spatial solutions, international and property data revenues, which more than offset the impact of unfavorable foreign currency translation.

Operating income from continuing operations totaled $60.7 million for the second quarter compared with $41.0 million for the second quarter of 2014.  The 48.0% increase in operating income resulted primarily from higher revenues, favorable operating leverage in our mortgage-related underwriting solutions businesses and lower expenses related to ongoing cost management and the Company's strategic transformation program.  These cost-related benefits were partially offset by increased depreciation and amortization.  Second quarter 2015 operating income margin was 15.7%, up from 11.2% in 2014.

Second quarter net income from continuing operations totaled $33.0 million compared with $26.7 million in 2014.  The $6.3 million year-over-year increase was driven primarily by revenue growth and margin expansion, which more than offset the 2014 investment gains and costs associated with the Company's amendment of its credit agreement.  Diluted EPS from continuing operations totaled $0.36 for the second quarter of 2015 compared with $0.29 in the second quarter of 2014.  Adjusted diluted EPS totaled $0.55, up 41.0%, reflecting the positive impacts of revenue growth, margin improvement and share repurchases.

Adjusted EBITDA totaled $117.8 million in the second quarter 2015 compared with $97.3 million in the same prior year period.  Second quarter 2015 adjusted EBITDA margin was 30.5%, up from 26.6% in 2014.  The increase in adjusted EBITDA was principally the result of revenue growth, favorable business mix, lower costs related to integrating acquisitions and cost productivity benefits, which were partially offset by investments in product and service development as well as technology, compliance and data monetization initiatives.  TPS adjusted EBITDA increased $22.1 million or 43.4% to $73.1 million driven by operating leverage, cost management benefits and lower acquisition-related integration costs. D&A adjusted EBITDA declined $1.1 million or 2.0% to $54.5 million as growth in insurance and geospatial revenues and cost containment benefits was offset by investments in product and service development, technology platforms, compliance infrastructure, data monetization initiatives, and unfavorable currency translation.  The impact of unfavorable currency translation on second quarter D&A results was $1.8 million

Cost Management And Technology Excellence In line with the Company's demonstrated commitment to operational excellence and progressive growth in profit margins, during the first quarter of 2015, CoreLogic announced a multi-year productivity and cost management program which is expected to reduce expense, on an annual run-rate basis, by approximately $60 million by 2018. Savings are expected to be realized through the reduction of selling, general and administrative costs, outsourcing certain business process functions, consolidation of facilities and other operational improvements. This program will incorporate expected savings from the completion of Phase I of the Company's previously announced TTI.  TTI Phase I, completed during the second quarter of 2015, focused principally on the transition of the Company's existing technology infrastructure to a managed service arrangement with Dell Services. The second phase of the TTI (TTI-NextGen) relates to the development of the Company's next generation technology platform which is designed to augment and eventually replace substantial portions of our legacy systems.

The Company expects to realize approximately $15 million in total savings from its cost productivity and management program during 2015, including $10 million in savings attributable to the completion of TTI Phase I.  Additional run-rate savings of $30 million are targeted in 2016 with additional savings of $15 million expected during 2017. Cash and non-cash charges associated with this program are expected to aggregate approximately $20 million and will be incurred over the course of the three-year program.

Liquidity and Capital Resources At June 30, 2015, the Company had cash and cash equivalents of $113.1 million compared with $104.7 million at December 31, 2014.   As of June 30, 2015, the Company had available capacity on its revolving credit facility of $550.0 million.  Total debt as of June 30, 2015 was approximately $1.3 billion.  During April 2015, the Company completed an amendment to its senior secured credit agreement which increased borrowing capacity and lowered interest rates.  In addition, the amendment provided for increased flexibility for acquisitions and certain types of investments as well as an extension of the maturity by approximately thirteen months.

Free cash flow (FCF) for the twelve months ended June 30, 2015 totaled $256.1 million, which represented 61.5% of adjusted EBITDA.  FCF is defined as net cash provided by continuing operating activities less capital expenditures for purchases of property and equipment, capitalized data and other intangible assets.  Net operating cash provided by continuing operations for the twelve months ended June 30, 2015 was $340.6 million.

During the second quarter, the Company repurchased approximately 1.5 million of its common shares for a total consideration of $58.7 million.

Updated 2015 Financial Guidance (Continuing Operations) Based on current business conditions and trends, available market estimates of second half 2015 U.S. mortgage origination volumes and the forecasted impact of previously announced investment and cost reduction programs, the Company has updated its 2015 full-year guidance ranges as follows: revenues, adjusted EBITDA and adjusted EPS of $1.49 to $1.51 billion, $410 to $420 million and $1.75 to $1.85 per share, respectively.

Teleconference/Webcast CoreLogic management will host a live webcast and conference call on Friday, July 24, 2015 at 8:00 a.m. Pacific time (11:00 a.m. Eastern Time) to discuss reported results.  All interested parties are invited to listen to the event via webcast on the CoreLogic website at http://investor.corelogic.com.  Alternatively, participants may use the following dial-in numbers: 877-930-8098 for U.S./Canada callers or 253-336-8228 for international callers. The Conference ID for the call is 72573150.

Additional detail on the Company's second quarter results is included in the quarterly financial supplement, available on the Investor Relations page at http://investor.corelogic.com.

A replay of the webcast will be available on the CoreLogic investor website for 30 days and also through the conference call number 855-859-2056 for U.S./Canada participants or 404-537-3406 for international participants using Conference ID 72573150.

About CoreLogic CoreLogic (NYSE: CLGX) is a leading global property information, analytics and data-enabled services provider. The Company's combined data from public, contributory and proprietary sources includes over 4.5 billion records spanning more than 50 years, providing detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related performance information. The markets CoreLogic serves include real estate and mortgage finance, insurance, capital markets, and the public sector. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and managed services. Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and mitigate risk. Headquartered in Irvine, Calif., CoreLogic operates in North America, Western Europe and Asia Pacific. For more information, please visit www.corelogic.com.

Safe Harbor / Forward Looking Statements 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 investment and strategic growth plans, cost reductions, productivity excellence and the TTI; the Company's overall financial performance, including future revenue and profit growth and market position, and the Company's margin and cash flow profile; the Company's updated 2015 financial guidance and assumptions thereunder; and the Company's plans to reduce outstanding debt and continue to return capital to shareholders through the share repurchase program. Risks and uncertainties exist that may cause the 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 include the risks and uncertainties set forth in Part I, Item 1A of our most recent Annual Report on Form 10-K, as amended or updated by our Quarterly Reports on Form 10-Q. These additional risks and uncertainties include but are not limited to: limitations on access to or increase in prices for 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, including the transmission of confidential information or systems interruptions; difficult conditions in the mortgage and consumer lending industries and the economy generally; our ability to protect proprietary rights; our cost reduction program, TTI and growth strategies and our ability to effectively and efficiently implement them; risks related to the outsourcing of services and international operations; our indebtedness and the restrictions in our various debt agreements; our ability to realize the anticipated benefits of certain acquisitions and/or divestitures and the timing thereof; the inability to control the operations or dividend policies of our partially-owned affiliates; and impairments in our goodwill or other intangible assets. 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 (Generally Accepted Accounting Principles) Financial Measures This press release contains certain non-GAAP financial measures which are provided only as supplemental information. Investors should consider these non-GAAP financial measures only in conjunction with the most directly comparable GAAP financial measures. These non-GAAP measures are not in accordance with or a substitute for U.S. GAAP. A reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures is included in this press release. The Company is not able to provide a reconciliation of projected adjusted EBITDA or projected adjusted earnings per share, where provided, to expected results due to the unknown effect, timing and potential significance of special charges or gains.

The Company believes that its presentation of non-GAAP measures, such as adjusted EBITDA, adjusted EPS and FCF, provides useful supplemental information to investors and management regarding CoreLogic's financial condition and results. Adjusted EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortization, non-cash stock compensation, non-operating gains/losses and other adjustments plus pretax equity in earnings of affiliates. Adjusted net income is defined as income from continuing operations before equity earnings of affiliates, adjusted for non-cash stock compensation, amortization of acquisition-related intangibles, non-operating gains/losses, and other adjustments plus pretax equity in earnings of affiliates, tax affected at an assumed effective tax rate of 35% for 2015 and 38% for 2014. Adjusted EPS is derived by dividing adjusted net income by diluted weighted average shares. FCF is defined as net cash provided by continuing operating activities less capital expenditures for purchases of property and equipment, capitalized data and other intangible assets. Other firms may calculate non-GAAP measures differently than CoreLogic, which limits comparability between companies.

(Additional Financial Data Follow)

 

CORELOGIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

For the Three Months Ended

For the Six Months Ended

June 30,

June 30,

(in thousands, except per share amounts)

2015

2014

2015

2014

Operating revenues

$

386,013

$

365,970

$

750,784

$

692,074

Cost of services (excluding depreciation and amortization shown below)

189,743

192,088

375,286

379,748

Selling, general and administrative expenses

98,291

93,422

192,276

187,388

Depreciation and amortization

37,272

35,366

73,192

64,872

Impairment loss

4,074

58

4,222

  Total operating expenses

325,306

324,950

640,812

636,230

  Operating income

60,707

41,020

109,972

55,844

Interest expense:

Interest income

882

1,041

2,340

2,213

Interest expense

17,480

17,321

31,315

34,149

  Total interest expense, net

(16,598)

(16,280)

(28,975)

(31,936)

(Loss)/gain on investments and other, net

(1,356)

6,992

(1,047)

2,642

Income from continuing operations before equity in earnings of affiliates and income taxes

42,753

31,732

79,950

26,550

Provision for income taxes

14,156

8,637

25,622

8,751

Income from continuing operations before equity in earnings of affiliates

28,597

23,095

54,328

17,799

Equity in earnings of affiliates, net of tax

4,667

3,874

8,434

6,257

Net income from continuing operations

33,264

26,969

62,762

24,056

Loss from discontinued operations, net of tax

(217)

(10,750)

(329)

(10,363)

Net income

33,047

16,219

62,433

13,693

Less: Net income attributable to noncontrolling interests

258

230

465

495

Net income attributable to CoreLogic

$

32,789

$

15,989

$

61,968

$

13,198

Amounts attributable to CoreLogic stockholders:

Net income from continuing operations

$

33,006

$

26,739

$

62,297

$

23,561

Loss from discontinued operations, net of tax

(217)

(10,750)

(329)

(10,363)

Net income attributable to CoreLogic

$

32,789

$

15,989

$

61,968

$

13,198

Basic income per share:

Net income from continuing operations

$

0.37

$

0.29

$

0.69

$

0.26

Loss from discontinued operations, net of tax

(0.12)

(0.11)

Net income attributable to CoreLogic

$

0.37

$

0.17

$

0.69

$

0.15

Diluted income per share:

Net income from continuing operations

$

0.36

$

0.29

$

0.68

$

0.25

Loss from discontinued operations, net of tax

(0.12)

(0.11)

Net income attributable to CoreLogic

$

0.36

$

0.17

$

0.68

$

0.14

Weighted-average common shares outstanding:

Basic

89,654

91,750

89,702

91,591

Diluted

90,963

93,062

91,038

93,235

Please refer to the full Form 10-Q filing for the complete financial statements and related notes that are an integral part of the financial statements.

 

CORELOGIC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

UNAUDITED

(in thousands, except par value)

June 30,

December 31,

Assets

2015

2014

Current assets:

Cash and cash equivalents

$

113,128

$

104,677

Marketable securities

23,800

22,264

Accounts receivable (less allowance for doubtful accounts of $11,686 and $10,826 as of June 30, 2015 and December 31, 2014, respectively)

267,066

214,344

Prepaid expenses and other current assets

52,936

51,375

Income tax receivable

11,227

13,357

Deferred income tax assets, current

90,341

90,341

Assets of discontinued operations

998

4,267

Total current assets

559,496

500,625

Property and equipment, net

350,969

368,614

Goodwill, net

1,769,718

1,780,758

Other intangible assets, net

256,311

278,270

Capitalized data and database costs, net

329,969

333,265

Investment in affiliates, net

103,549

103,598

Restricted cash

11,706

12,360

Other assets

139,629

138,872

Total assets

$

3,521,347

$

3,516,362

Liabilities and Equity

Current liabilities:

Accounts payable and accrued expenses

$

167,783

$

170,418

Accrued salaries and benefits

85,181

99,786

Deferred revenue, current

268,087

255,330

Current portion of long-term debt

48,064

11,352

Liabilities of discontinued operations

2,887

13,704

Total current liabilities

572,002

550,590

Long-term debt, net of current

1,261,270

1,319,211

Deferred revenue, net of current

423,275

389,308

Deferred income tax liabilities, long term

62,757

63,979

Other liabilities

163,691

161,084

Total liabilities

2,482,995

2,484,172

Redeemable noncontrolling interests

17,997

18,023

Equity:

CoreLogic stockholders' equity:

Preferred stock, $0.00001 par value; 500 shares authorized, no shares issued or outstanding

Common stock, $0.00001 par value; 180,000 shares authorized; 89,069 and 89,343 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively

1

1

Additional paid-in capital

570,697

605,511

Retained earnings

554,903

492,441

Accumulated other comprehensive loss

(105,246)

(83,786)

Total equity

1,020,355

1,014,167

Total liabilities and equity

$

3,521,347

$

3,516,362

Please refer to the full Form 10-Q filing for the complete financial statements and related notes that are an integral part of the financial statements.

 

CORELOGIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

For the Six Months Ended

June 30,

(in thousands)

2015

2014

Cash flows from operating activities:

Net income

$

62,433

$

13,693

Less: Loss from discontinued operations, net of tax

(329)

(10,363)

Net income from continuing operations

62,762

24,056

Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:

Depreciation and amortization

73,192

64,872

Impairment loss

58

4,222

Provision for bad debt and claim losses

5,754

6,958

Share-based compensation

18,539

15,760

Excess tax benefit related to stock options

(5,641)

(6,275)

Equity in earnings of affiliates, net of taxes

(8,434)

(6,257)

Gain on sale of property and equipment

(24)

Loss on early extinguishment of debt

1,589

763

Deferred income tax

(1,113)

3,339

Loss/(gain) on investments and other, net

1,047

(2,642)

Change in operating assets and liabilities, net of acquisitions:

Accounts receivable

(52,792)

7,703

Prepaid expenses and other current assets

(1,561)

1,815

Accounts payable and accrued expenses

(16,582)

(30,314)

Deferred revenue

46,724

(12,369)

Income taxes

(3,355)

44,723

Dividends received from investments in affiliates

16,488

26,052

Other assets and other liabilities

(3,548)

(14,279)

Net cash provided by operating activities - continuing operations

133,127

128,103

Net cash (used in)/provided by operating activities - discontinued operations

(7,372)

7,430

Total cash provided by operating activities

$

125,755

$

135,533

Cash flows from investing activities:

Purchases of property and equipment

$

(21,496)

$

(26,296)

Purchases of capitalized data and other intangible assets

(18,707)

(16,533)

Cash paid for acquisitions, net of cash acquired

(670,036)

Purchases of investments

(2,516)

Proceeds from sale of property and equipment

36

Change in restricted cash

654

(494)

Net cash used in investing activities - continuing operations

(42,065)

(713,323)

Net cash used in investing activities - discontinued operations

Total cash used in investing activities

$

(42,065)

$

(713,323)

Cash flows from financing activities:

Proceeds from long-term debt

$

14,375

$

690,017

Debt issuance costs

(6,452)

(14,042)

Repayment of long-term debt

(36,078)

(56,550)

Proceeds from issuance of stock related to stock options and employee benefit plans

18,109

4,440

Minimum tax withholding paid on behalf of employees for restricted stock units

(12,742)

(15,034)

Shares repurchased and retired

(58,720)

(32,041)

Excess tax benefit related to stock options

5,641

6,275

Net cash (used in)/provided by financing activities - continuing operations

(75,867)

583,065

Net cash provided by financing activities - discontinued operations

Total cash (used in)/provided by financing activities

$

(75,867)

$

583,065

Effect of exchange rate on cash

1,132

903

Net increase in cash and cash equivalents

8,955

6,178

Cash and cash equivalents at beginning of period

104,677

134,419

Less: Change in cash and cash equivalents - discontinued operations

(7,372)

7,430

Plus: Cash swept (to)/from discontinued operations

(7,876)

7,057

Cash and cash equivalents at end of period

$

113,128

$

140,224

Please refer to the full Form 10-Q filing for the complete financial statements and related notes that are an integral part of the financial statements.

 

CORELOGIC, INC.

RECONCILIATION OF ADJUSTED EBITDA

UNAUDITED

For the Three Months Ended June 30, 2015

(in thousands)

D&A

TPS

Corporate

Elim

CoreLogic

Income/(loss) from continuing operations before equity in earnings of affiliates and income taxes

$

24,784

$

57,031

$

(39,062)

$

$

42,753

Pre-tax equity in (loss)/earnings of affiliates

(383)

8,068

79

7,764

Depreciation & amortization

25,823

6,545

4,904

37,272

Total interest expense

17

83

16,498

16,598

Stock-based compensation

2,802

1,323

5,682

9,807

Non-operating investment loss

1,590

1,590

Efficiency investments

350

350

Transaction costs

1,440

258

1,698

Adjusted EBITDA

$

54,483

$

73,050

$

(9,701)

$

$

117,832

For the Three Months Ended June 30, 2014

(in thousands)

D&A

TPS

Corporate

Elim

CoreLogic

Income/(loss) from continuing operations before equity in earnings of affiliates and income taxes

$

28,162

$

38,644

$

(35,074)

$

$

31,732

Pre-tax equity in (loss)/earnings of affiliates

(202)

6,409

66

6,273

Depreciation & amortization

25,812

6,615

2,939

35,366

Total interest expense

(21)

73

16,228

16,280

Stock-based compensation

1,691

1,300

4,759

7,750

Impairment loss

174

3,900

4,074

Non-operating investment gains

(6,012)

(6,012)

Efficiency investments

694

694

Transaction costs

1,118

1,118

Adjusted EBITDA

$

55,616

$

50,929

$

(9,270)

$

$

97,275

 

CORELOGIC, INC.

RECONCILIATION OF ADJUSTED DILUTED EPS

UNAUDITED

For the Three Months Ended June 30, 2015

(in thousands, except per share amounts)

D&A

TPS

Corporate

Elim

CoreLogic

Income/(loss) from continuing operations before equity in earnings of affiliates and income taxes

$

24,784

$

57,031

$

(39,062)

$

$

42,753

Pre-tax equity in (loss)/earnings of affiliates

(383)

8,068

79

7,764

Stock-based compensation

2,802

1,323

5,682

9,807

Non-operating investment loss

1,590

1,590

Efficiency investments

350

350

Transaction costs

1,440

258

1,698

Amortization of acquired intangibles

6,893

2,822

9,715

Interest expense adjustments

444

444

Depreciation of certain acquired proprietary technology included in property and equipment

2,880

2,880

Adjusted pretax income from continuing operations

$

38,416

$

69,244

$

(30,659)

$

$

77,001

Tax provision (35% rate)

26,950

Less: Net income attributable to noncontrolling interests

258

Adjusted net income attributable to CoreLogic

$

49,793

Weighted average diluted common shares outstanding

90,963

Adjusted diluted EPS

$

0.55

For the Three Months Ended June 30, 2014

(in thousands, except per share amounts)

D&A

TPS

Corporate

Elim

CoreLogic

Income/(loss) from continuing operations before equity in earnings of affiliates and income taxes

$

28,162

$

38,644

$

(35,074)

$

$

31,732

Pre-tax equity in (loss)/earnings of affiliates

(202)

6,409

66

6,273

Stock-based compensation

1,691

1,300

4,759

7,750

Non-operating investment gains

(6,012)

(6,012)

Efficiency investments

694

694

Impairment loss

174

3,900

4,074

Transaction costs

1,118

1,118

Amortization of acquired intangibles

7,308

2,671

9,979

Depreciation of certain acquired proprietary technology included in property and equipment

2,635

2,635

Adjusted pretax income from continuing operations

$

39,768

$

46,912

$

(28,437)

$

$

58,243

Tax provision (38% rate)

22,132

Less: Net loss attributable to noncontrolling interests

230

Adjusted net income attributable to CoreLogic

$

35,881

Weighted average diluted common shares outstanding

93,062

Adjusted diluted EPS

$

0.39

CORELOGIC, INC.

RECONCILIATION TO FREE CASH FLOW

UNAUDITED

For the Twelve Months Ended June 30, 2015

Net cash provided by operating activities - continuing operations

$

340,617

Purchases of property and equipment

(47,225)

Purchases of capitalized data and other intangible assets

(37,303)

Free Cash Flow

$

256,089

 

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SOURCE CoreLogic



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