CORELOGIC, INC. IRVINE, Calif., April 22, 2015 /PRNewswire/ -- CoreLogic (NYSE:CLGX), a leading global property information, analytics and data-enabled services provider, today reported financial results for the quarter ended March 31, 2015.
"CoreLogic is off to an outstanding start in 2015 with strong growth in revenues, operating profits, free cash flow and diluted earnings per share. Importantly, we successfully captured the benefits of an uptick in mortgage market activity while we continued to expand our product offerings, technology and operational capabilities and market share," said Anand Nallathambi, President and Chief Executive Officer of CoreLogic. "Over the balance of this year, we will continue to focus on expanding our market leadership in underwriting and risk management-related solutions which are powered by our "must have" data, analytics and data-enabled workflow tools and platforms."
"Our strong first quarter financial performance reflects the continuing shift in our business mix toward scaled platforms that provide unique data-driven insights with high levels of subscription-based revenues," added Frank Martell, Chief Operating and Financial Officer of CoreLogic. "As we move forward, we plan to accelerate our already considerable progress toward becoming a higher-growth, higher-margin firm. To this end, we increased investment in our NextGen technology platform, upsized our cost management and productivity targets to approximately $60 million over the next three years and amended our credit facility to provide additional flexibility to pursue opportunistic growth opportunities and to continue to drive our capital allocation priorities."
First-Quarter Financial Highlights
First quarter revenues increased 12% from prior year levels to $364.8 million. Revenue growth was principally attributable to higher demand for property data, analytics and underwriting solutions as well as market share gains and the benefits of the acquisition of Marshall & Swift /Boeckh (MSB) and DataQuick (DQ). D&A revenues rose 19% compared with prior year to $165.6 million driven principally by gains in insurance, international and core property data, which more than offset the impact of unfavorable foreign currency translation and lower multifamily services revenues. TPS revenues increased 6% year-over-year to $201.6 million driven primarily by higher demand for underwriting solutions which more than offset lower specialty credit and project-related document processing and retrieval revenues.
Operating income from continuing operations totaled $49.3 million for the first quarter compared with $14.8 million for the first quarter of 2014. The 232% increase in operating income resulted primarily from higher revenues, favorable operating leverage in our mortgage-related underwriting solutions businesses and lower expenses related to the cost efficiency programs, which were partially offset by increased depreciation and amortization associated with the acquisition of MSB and DQ. Prior year operating income also reflected certain costs related to the Company's strategic transformation program including transaction costs of $8.5 million related to the MSB and DQ acquisitions and costs associated with the integration of the tax and flood services operations of Bank of America (BAC tax and flood) totaling $4.4 million, which had no 2015 counterpart. First quarter 2015 operating income margin was 14%, up from 5%.
First quarter net income from continuing operations totaled $29.3 million compared with a net loss of $3.2 million in 2014. The $32.5 million year-over-year jump was primarily driven by higher operating income and lower interest costs, which more than offset the impact of increased provisions for income taxes. Diluted EPS from continuing operations totaled $0.32 for the first quarter of 2015 compared with a loss of $0.03 in the first quarter of 2014. Adjusted diluted EPS totaled $0.46, up 156% reflecting the positive impacts of revenue growth, margin improvement and share repurchases.
Adjusted EBITDA totaled $100.9 million in first quarter 2015 compared with $65.4 million in first quarter 2014. First quarter 2015 adjusted EBITDA margin was 28%, up from 20% in 2014. The increase in adjusted EBITDA and margins was principally the result of double-digit revenue growth and favorable business mix as well as lower costs resulting from ongoing cost management programs. In addition, 2014 adjusted EBITDA included integration costs attributable to the BAC tax and flood acquisition which had no 2015 counterpart. D&A adjusted EBITDA totaled $53.5 million, a 41% increase from 2014, as higher revenues from insurance and property information and cost containment benefits more than offset unfavorable currency translation. TPS adjusted EBITDA increased 58% to $58.8 million as operating leverage, cost management benefits and lower acquisition-related integration costs drove improved results.
Cost Management And Technology Excellence
In line with the Company's demonstrated commitment to operational excellence and progressive growth in profit margins, CoreLogic is implementing an expanded three-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 (SG&A) 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 Technology Transformation Initiative (TTI). TTI Phase I, which is scheduled for completion in June 2015, incorporates 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. TTI-NextGen is expected to support accelerated revenue growth trends beginning in 2015.
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 (including an incremental $20 million associated with TTI Phase I) 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 March 31, 2015, the Company had cash and cash equivalents of $89.7 million compared with $104.7 million at December 31, 2014. As of March 31, 2015, the Company had available capacity on its revolving credit facility of $490.0 million. Total debt as of March 31, 2015 was $1.3 billion. During the first quarter of 2015, the Company repaid $35.6 million in term loan, revolving and other debt obligations.
On April 21, 2015, CoreLogic 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 term by approximately thirteen months.
Free cash flow (FCF) for the twelve months ended March 31, 2015 totaled $275.8 million, which represented 70% 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 March 31, 2015 was $365.0 million.
Teleconference/Webcast
CoreLogic management will host a live webcast and conference call on Thursday, April 23, 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 19801445.
Additional detail on the Company's first 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 19801445.
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 3.5 billion records spanning more than 40 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 and productivity 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 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
March 31,
---------
(in thousands, except per share
amounts) 2015 2014
---- ----
Operating revenues $364,772 $326,104
Cost of services (excluding
depreciation and amortization shown
below) 185,543 187,660
Selling, general and administrative
expenses 93,986 93,963
Depreciation and amortization 35,920 29,506
Impairment loss 58 148
--- ---
Total operating expenses 315,507 311,277
------- -------
Operating income 49,265 14,827
------ ------
Interest expense:
Interest income 1,458 1,171
Interest expense 13,835 16,828
------ ------
Total interest expense, net (12,377) (15,657)
Gain/(loss) on investments and
other, net 309 (4,351)
--- ------
Income/(loss) from continuing
operations before equity in earnings
of affiliates and income taxes 37,197 (5,181)
Provision for income taxes 11,465 114
------ ---
Income/(loss) from continuing
operations before equity in earnings
of affiliates 25,732 (5,295)
Equity in earnings of affiliates, net
of tax 3,766 2,382
----- -----
Net income/(loss) from continuing
operations 29,498 (2,913)
(Loss)/income from discontinued
operations, net of tax (111) 385
---- ---
Net income/(loss) 29,387 (2,528)
Less: Net income attributable to
noncontrolling interests 208 264
Net income/(loss) attributable to
CoreLogic $29,179 $(2,792)
======= =======
Amounts attributable to CoreLogic
stockholders:
Net income/(loss) from continuing
operations $29,290 $(3,177)
(Loss)/income from discontinued
operations, net of tax (111) 385
Net income/(loss) attributable to
CoreLogic $29,179 $(2,792)
======= =======
Basic income per share:
Net income/(loss) from continuing
operations $0.33 $(0.03)
(Loss)/income from discontinued
operations, net of tax - -
Net income/(loss) attributable to
CoreLogic $0.33 $(0.03)
===== ======
Diluted income per share:
Net income/(loss) from continuing
operations $0.32 $(0.03)
(Loss)/income from discontinued
operations, net of tax - -
Net income/(loss) attributable to
CoreLogic $0.32 $(0.03)
===== ======
Weighted-average common shares
outstanding:
Basic 89,751 91,433
Diluted 91,117 91,433
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) March 31, December 31,
Assets 2015 2014
---- ----
Current assets:
Cash and cash equivalents $89,706 $104,677
Marketable securities 21,950 22,264
Accounts receivable (less allowance for
doubtful accounts of $10,153 and $10,826 as
of March 31, 2015 and December 31, 2014,
respectively) 226,495 214,344
Prepaid expenses and other current assets 55,037 51,375
Income tax receivable 13,328 13,357
Deferred income tax assets, current 90,341 90,341
Assets of discontinued operations 4,723 4,267
----- -----
Total current assets 501,580 500,625
Property and equipment, net 359,275 368,614
Goodwill, net 1,769,199 1,780,758
Other intangible assets, net 266,131 278,270
Capitalized data and database costs, net 329,227 333,265
Investment in affiliates, net 101,715 103,598
Restricted cash 12,214 12,360
Other assets 134,634 138,872
Total assets $3,473,975 $3,516,362
========== ==========
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses $178,921 $170,418
Accrued salaries and benefits 69,817 99,786
Deferred revenue, current 254,322 255,330
Current portion of long-term debt 16,194 11,352
Liabilities of discontinued operations 12,805 13,704
------ ------
Total current liabilities 532,059 550,590
Long-term debt, net of current 1,278,881 1,319,211
Deferred revenue, net of current 394,580 389,308
Deferred income tax liabilities, long term 64,426 63,979
Other liabilities 159,059 161,084
Total liabilities 2,429,005 2,484,172
--------- ---------
Redeemable noncontrolling interests 16,783 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; 90,194 and 89,343 shares
issued and outstanding as of March 31, 2015
and December 31, 2014, respectively 1 1
Additional paid-in capital 613,152 605,511
Retained earnings 523,068 492,441
Accumulated other comprehensive loss (108,034) (83,786)
-------- -------
Total equity 1,028,187 1,014,167
Total liabilities and equity $3,473,975 $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 Three Months Ended
March 31,
---------
(in thousands) 2015 2014
---- ----
Cash flows from operating
activities:
Net income/(loss) $29,387 $(2,528)
Less: (Loss)/income from
discontinued operations, net of
tax (111) 385
---
Net income/(loss) from continuing
operations 29,498 (2,913)
Adjustments to reconcile net
income/(loss) from continuing
operations to net cash provided
by operating activities:
Depreciation and amortization 35,920 29,506
Impairment loss 58 148
Provision for bad debt and claim
losses 2,612 3,688
Share-based compensation 8,732 8,011
Excess tax benefit related to
stock options (4,575) (5,942)
Equity in earnings of affiliates,
net of taxes (3,766) (2,382)
Loss on early extinguishment of
debt - 593
Deferred income tax 1,978 44
(Gain)/loss on investments and
other, net (309) 4,351
Change in operating assets and
liabilities, net of acquisitions:
Accounts receivable (12,070) 11,768
Prepaid expenses and other current
assets (3,662) 2,863
Accounts payable and accrued
expenses (19,570) (32,264)
Deferred revenue 4,264 (8,554)
Income taxes (2,359) (7,856)
Dividends received from
investments in affiliates 8,420 4,258
Other assets and other liabilities (3,927) 6,525
------ -----
Net cash provided by operating
activities -continuing
operations 41,244 11,844
Net cash (used in)/provided by
operating activities -
discontinued operations (1,010) 4,809
Total cash provided by operating
activities $40,234 $16,653
------- -------
Cash flows from investing
activities:
Purchases of property and
equipment $(11,397) $(13,427)
Purchases of capitalized data and
other intangible assets (11,244) (7,185)
Cash paid for acquisitions, net of
cash acquired - (665,758)
Purchases of investments (388) -
Change in restricted cash 146 (580)
Net cash used in investing
activities -continuing
operations (22,883) (686,950)
Net cash used in investing
activities -discontinued
operations - (6)
Total cash used in investing
activities $(22,883) $(686,956)
-------- ---------
Cash flows from financing
activities:
Proceeds from long-term debt $135 $689,641
Debt issuance costs - (14,042)
Repayment of long-term debt (35,551) (5,154)
Proceeds from issuance of stock
related to stock options and
employee benefit plans 10,701 2,730
Minimum tax withholding paid on
behalf of employees for
restricted stock units (11,792) (14,314)
Shares repurchased and retired - (6,850)
Excess tax benefit related to
stock options 4,575 5,942
Net cash (used in)/provided by
financing activities -continuing
operations (31,932) 657,953
Net cash provided by financing
activities -discontinued
operations - -
Total cash (used in)/provided by
financing activities $(31,932) $657,953
-------- --------
Effect of exchange rate on cash 67 482
Net decrease in cash and cash
equivalents (14,514) (11,868)
Cash and cash equivalents at
beginning of period 104,677 134,419
Less: Change in cash and cash
equivalents -discontinued
operations (1,010) 4,803
Plus: Cash swept (to)/from
discontinued operations (1,467) 4,477
------ -----
Cash and cash equivalents at end
of period $89,706 $122,225
======= ========
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 March 31, 2015
-----------------------------------------
(in thousands) D&A TPS Corporate Elim CoreLogic
--- --- --------- ---- ---------
Income/(loss) from
continuing operations
before equity in
earnings of affiliates
and income taxes $26,366 $44,102 $(33,271) $ - $37,197
Pre-tax equity in
(loss)/earnings of
affiliates (522) 6,663 13 - 6,154
Depreciation &
amortization 25,603 6,772 3,545 - 35,920
Total interest expense 40 76 12,261 - 12,377
Stock-based compensation 2,020 1,121 5,590 - 8,731
Impairment loss - 58 - - 58
Efficiency investments - - 331 - 331
Transaction costs - - 150 - 150
Adjusted EBITDA $53,507 $58,792 $(11,381) $ - $100,918
======= ======= ======== === === ========
For the Three Months Ended March 31, 2014
-----------------------------------------
(in thousands) D&A TPS Corporate Elim CoreLogic
--- --- --------- ---- ---------
Income/(loss) from
continuing operations
before equity in
earnings of affiliates
and income taxes $15,793 $25,146 $(46,120) $ - $(5,181)
Pre-tax equity in
(loss)/earnings of
affiliates (13) 3,977 (105) - 3,859
Depreciation &
amortization 20,092 6,479 2,935 - 29,506
Total interest expense 23 134 15,500 - 15,657
Stock-based compensation 1,798 1,429 4,784 - 8,011
Impairment loss 148 - - - 148
Non-operating investment
loss - - 4,137 - 4,137
Efficiency investments - - 780 - 780
Transaction costs - - 8,532 - 8,532
Adjusted EBITDA $37,841 $37,165 $(9,557) $ - $65,449
======= ======= ======= === === =======
CORELOGIC, INC.
RECONCILIATION OF ADJUSTED DILUTED EPS
UNAUDITED
For the Three Months Ended March 31, 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 $26,366 $44,102 $(33,271) $ - $37,197
Pre-tax equity in
(loss)/earnings of
affiliates (522) 6,663 13 - 6,154
Stock-based compensation 2,020 1,121 5,590 - 8,731
Efficiency investments - - 331 - 331
Transaction costs - - 150 - 150
Impairment loss - 58 - - 58
Amortization of acquired
intangibles 6,925 2,867 - - 9,792
Depreciation of certain
acquired proprietary
technology included in
property and equipment 2,880 - - - 2,880
Adjusted pretax income
from continuing
operations $37,669 $54,811 $(27,187) $ - $65,293
------- ------- -------- --- --- -------
Tax provision (35% rate) 22,853
Less: Net income attributable to
noncontrolling interests 208
---
Adjusted net income attributable to
CoreLogic $42,232
-------
Weighted average diluted common shares
outstanding 91,117
------
Adjusted diluted EPS $0.46
-----
For the Three Months Ended March 31, 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 $15,793 $25,146 $(46,120) $ - $(5,181)
Pre-tax equity in
(loss)/earnings of
affiliates (13) 3,977 (105) - 3,859
Stock-based compensation 1,798 1,429 4,784 - 8,011
Non-operating investment
loss - - 4,137 - 4,137
Efficiency investments - - 780 - 780
Impairment loss 148 - - - 148
Transaction costs - - 8,532 - 8,532
Interest expense
adjustments - - 130 - 130
Amortization of acquired
intangibles 5,007 2,601 - - 7,608
Adjusted pretax income
from continuing
operations $22,733 $33,153 $(27,862) $ - $28,024
------- ------- -------- --- --- -------
Tax provision (38% rate) 10,649
Less: Net loss attributable to
noncontrolling interests 264
---
Adjusted net income attributable to
CoreLogic $17,111
-------
Weighted average diluted common shares
outstanding 93,409
------
Adjusted diluted EPS $0.18
-----
CORELOGIC, INC.
RECONCILIATION TO FREE CASH FLOW
UNAUDITED
For the Twelve
Months Ended
March 31, 2015
--------------
Net cash provided by operating activities - continuing operations $364,993
Purchases of property and equipment (49,995)
Purchases of capitalized data and other intangible assets (39,188)
-------
Free cash flow $275,810
========
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