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CoreLogic Reports First Quarter 2018 Financial Results

Outstanding Operating Performance Highlighted by Revenue Growth, Significant Margin Expansion and Strong Cash Flow Generation

IRVINE, Calif. — (BUSINESS WIRE) — April 25, 2018 — CoreLogic (NYSE: CLGX), a leading global provider of property information, insight, analytics and data-enabled solutions, today reported financial results for the quarter ended March 31, 2018. Operating and financial highlights for the first quarter appear below.

“CoreLogic is off to a very strong start in 2018 delivering top line growth, strong margin expansion and high levels of free cash flow. Operationally, both PIRM and UWS executed extremely well against our business plans as we continued to outperform the U.S. mortgage market volume trends and expand our footprint in areas such as property insights, international, insurance & spatial solutions and valuations,” said Frank Martell, President and Chief Executive Officer of CoreLogic. “We also drove up Adjusted EBITDA margins almost 300 basis points through productivity, cost management and favorable revenue mix. I believe our first quarter margin improvement is an important indicator of the progress we are making toward achieving our longer-term profitability targets.”

"We head into the balance of 2018 excited by the opportunities inherent in our strategic plan which is focused on delivering unique, must-have insights that power and connect the global housing ecosystem over the long term. We remain focused on capitalizing on our scale and market leadership and the opportunities presented by a strong purchase-driven mortgage cycle in the U.S. where we have built solutions that are poised to capitalize on the benefits of high operating leverage. In addition, our insurance & spatial solutions and international businesses provide us with opportunities for high margin non-cyclical growth,” Martell added.

First Quarter Financial Summary

First quarter revenues totaled $445 million compared with $440 million in the same 2017 period. PIRM revenues rose 5% to $174 million, driven by organic growth in property insights, including international operations, and benefits from insurance & spatial solutions related acquisitions completed in 2017. UWS segment revenues totaled $273 million, down 1%, as organic growth and the 2017 acquisition of Mercury Network largely offset the impact of lower U.S. mortgage loan unit volumes and planned vendor diversification by two appraisal management clients.

Operating income from continuing operations totaled $44 million for the first quarter compared with $33 million for the first quarter of 2017. The 36% year-over-year increase in operating income was principally attributable to revenue growth and favorable business mix as well as cost productivity related gains. First quarter operating income margin was up approximately 260 basis points to 10%.

First quarter net income from continuing operations totaled $28 million compared with $13 million in the same 2017 period. The increase was primarily attributable to operating upsides outlined previously, along with a net tax benefit in the current quarter, which more than offset higher interest expense and depreciation and amortization. First quarter diluted EPS from continuing operations totaled $0.34 compared with $0.15 in 2017. Adjusted diluted EPS totaled $0.52, up from $0.37 in the first quarter of 2017.

Adjusted EBITDA aggregated $103 million in the first quarter compared with $90 million in the same prior year period. The 15% increase in adjusted EBITDA was principally driven by revenue growth, improved business mix and cost productivity. PIRM segment adjusted EBITDA increased 19% to $50 million. UWS segment adjusted EBITDA increased 21% to $65 million. Adjusted EBITDA margin was up 280 basis points to 23%.

Productivity Programs

As previously announced, the Company intends to incur cash and non-cash charges of approximately $15 million over the course of 2018 relating to its expansion of certain efficiency programs and infrastructure enhancements. These charges will be reflected in the Company’s GAAP financial results and will be excluded from Adjusted EBITDA and Adjusted EPS metrics which are non-GAAP measures. This program is expected to increase overall operating efficiency and accelerate the transformation of certain technology and data platforms. In addition, the Company expects to further consolidate its real estate footprint, reduce SG&A costs and automate and/or outsource certain business activities.

Liquidity and Capital Resources

As of March 31, 2018, the Company had cash and cash equivalents of $124 million compared with $119 million at December 31, 2017. Total debt as of March 31, 2018 was $1,732 million compared with $1,777 million as of December 31, 2017. As of March 31, 2018, the Company had available capacity on its revolving credit facility of $700 million.

Net operating cash provided by continuing operations for the twelve months ended March 31, 2018 was $384 million. Free cash flow (FCF) for the twelve months ended March 31, 2018 totaled $307 million, which represented 62% 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.

In the first quarter of 2018, the Company repurchased 400,000 of its common shares for $18.5 million. The Company also completed the acquisition of UK-based eTech Solutions in February 2018 utilizing cash on hand.

Teleconference/Webcast

CoreLogic management will host a live webcast and conference call on Thursday, April 26, 2018, at 8:00 a.m. Pacific time (11:00 a.m. Eastern Time) to discuss these 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: 1-844-861-5502 for U.S./Canada callers or 412-858-4604 for international callers. Additional detail on the Company's results are 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 10 days and through the conference call number 1-877-344-7529 for U.S. participants, 855-669-9658 for Canada participants or 1-412-317-0088 for international participants using Conference ID 10118566.

About CoreLogic

CoreLogic (NYSE: CLGX) is a leading global property information, analytics and data-enabled solutions 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 solutions. 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 productivity excellence, the Company's overall financial performance, including future revenue, adjusted EBITDA and Diluted EPS growth, and the Company's margin, tax rate and cash flow profile; and the Company's plans to 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. These additional risks and uncertainties include but are not limited to: our ability to protect our information systems against data corruption, cyber-based attacks or network security breaches; 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; systems interruptions that may impair the delivery of our products and services; difficult conditions in the mortgage and consumer lending industries and the economy generally; our ability to protect proprietary rights; our technology 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. The Company is not able to provide a reconciliation of projected adjusted EBITDA or projected adjusted earnings per share to respective GAAP 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 the Company's financial condition and results. Adjusted EBITDA is defined as net income from continuing operations adjusted for interest, taxes, depreciation and amortization, stock compensation, non-operating gains/losses and other adjustments. Adjusted EPS is defined as income from continuing operations, net of tax per diluted share, adjusted for stock compensation, amortization of acquisition-related intangibles, non-operating gains/losses, and other adjustments; tax affected at an assumed effective tax rate of 26% and 35% for 2018 and 2017, respectively. 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.

 

CORELOGIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

   
For the Three Months Ended
March 31,
(in thousands, except per share amounts) 2018   2017
Operating revenues $ 444,900 $ 439,851
Cost of services (excluding depreciation and amortization shown below) 239,389 251,966
Selling, general and administrative expenses 114,952 111,850
Depreciation and amortization 46,140   43,472  
Total operating expenses 400,481   407,288  
Operating income 44,419   32,563  
Interest expense:
Interest income 530 338
Interest expense 17,692   14,131  
Total interest expense, net (17,162 ) (13,793 )
Gain on investments and other, net 161   935  
Income from continuing operations before equity in earnings/(losses) of affiliates and income taxes 27,418 19,705
(Benefit)/provision for income taxes (711 ) 6,274  
Income from continuing operations before equity in earnings/(losses) of affiliates 28,129 13,431
Equity in earnings/(losses) of affiliates, net of tax 233   (723 )
Net income from continuing operations 28,362 12,708
(Loss)/income from discontinued operations, net of tax (75 ) 2,417
Gain from sale of discontinued operations, net of tax —   313  
Net income $ 28,287   $ 15,438  
Basic income per share:
Net income from continuing operations $ 0.35 $ 0.15
(Loss)/income from discontinued operations, net of tax — 0.03
Gain from sale of discontinued operations, net of tax —   —  
Net income $ 0.35   $ 0.18  
Diluted income per share:
Net income from continuing operations $ 0.34 $ 0.15
(Loss)/income from discontinued operations, net of tax — 0.03
Gain from sale of discontinued operations, net of tax —   —  
Net income $ 0.34   $ 0.18  
Weighted-average common shares outstanding:
Basic 81,254 84,432
Diluted 82,820 86,341
 

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 2018 2017
Current assets:
Cash and cash equivalents $ 123,698 $ 118,804
Accounts receivable (less allowance for doubtful accounts of $6,946 and $8,229 as of March 31, 2018 and December 31, 2017, respectively) 244,046 256,595
Prepaid expenses and other current assets 45,202 47,220
Income tax receivable 8,053   7,649  
Total current assets 420,999 430,268
Property and equipment, net 443,869 447,659
Goodwill, net 2,262,081 2,250,599
Other intangible assets, net 461,781 475,613
Capitalized data and database costs, net 329,146 329,403
Investment in affiliates, net 38,525 38,989
Deferred income tax assets 57 366
Other assets 110,721   104,516  
Total assets $ 4,067,179   $ 4,077,413  
Liabilities and Equity
Current liabilities:
Accounts payable and other accrued expenses $ 171,030 $ 145,655
Accrued salaries and benefits 76,146 93,717
Contract liabilities, current 310,590 303,948
Current portion of long-term debt 49,699   70,046  
Total current liabilities 607,465 613,366
Long-term debt, net of current 1,660,241 1,683,524
Contract liabilities, net of current 527,791 504,900
Deferred income tax liabilities 103,695 102,571
Other liabilities 159,978   165,176  
Total liabilities 3,059,170 3,069,537
 
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; 81,636 and 80,885 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively 1 1
Additional paid-in capital 219,594 224,455
Retained earnings 881,798 877,111
Accumulated other comprehensive loss (93,384 ) (93,691 )
Total stockholders' equity 1,008,009   1,007,876  
Total liabilities and equity $ 4,067,179   $ 4,077,413  
 

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)

2018   2017
Cash flows from operating activities:
Net income $ 28,287 $ 15,438
Less: (Loss)/income from discontinued operations, net of tax (75 ) 2,417
Less: Gain from sale of discontinued operations, net of tax —   313  
Net income from continuing operations 28,362 12,708
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:
Depreciation and amortization 46,140 43,472
Amortization of debt issuance costs 1,376 1,440
Provision for bad debt and claim losses 2,847 3,758
Share-based compensation 8,677 12,167
Equity in (earnings)/losses of affiliates, net of taxes (233 ) 723
Deferred income tax 6,250 8,911
Gain on investment and other, net (161 ) (935 )
Change in operating assets and liabilities, net of acquisitions:
Accounts receivable 12,745 10,952
Prepaid expenses and other current assets (764 ) 4,952
Accounts payable and accrued expenses 4,987 (11,267 )
Contract liabilities (2,756 ) 15,447
Income taxes (482 ) (2,293 )
Dividends received from investments in affiliates 776 —
Other assets and other liabilities (7,537 ) (4,357 )
Net cash provided by operating activities - continuing operations 100,227   95,678  
Net cash provided by/(used in) operating activities - discontinued operations 2   (25 )
Total cash provided by operating activities $ 100,229   $ 95,653  
Cash flows from investing activities:
Purchases of property and equipment (9,940 ) (8,671 )
Purchases of capitalized data and other intangible assets (9,544 ) (8,441 )
Cash paid for acquisitions, net of cash acquired (20,533 ) —
Proceeds from sale of property and equipment 100 3
Proceeds from investments 980   —  
Net cash used in investing activities - continuing operations (38,937 ) (17,109 )
Net cash provided by investing activities - discontinued operations —   —  
Total cash used in investing activities $ (38,937 ) $ (17,109 )
Cash flows from financing activities:
Proceeds from long-term debt $ 95 $ —
Repayment of long-term debt (45,722 ) (17,641 )
Shares repurchased and retired (18,479 ) (19,837 )
Proceeds from issuance of shares in connection with share-based compensation 15,473 2,390
Payment of tax withholdings related to net share settlements (10,532 ) (12,262 )
Net cash used in financing activities - continuing operations (59,165 ) (47,350 )
Net cash provided by financing activities - discontinued operations —   —  
Total cash used in financing activities $ (59,165 ) $ (47,350 )
Effect of exchange rate on cash, cash equivalents and restricted cash 311   (814 )
Net change in cash, cash equivalents and restricted cash $ 2,438 $ 30,380
Cash, cash equivalents and restricted cash at beginning of period 129,869 89,974
Less: Change in cash, cash equivalents and restricted cash - discontinued operations 2 (25 )
Plus: Cash swept from/(to) discontinued operations 2   (24 )
Cash, cash equivalents and restricted cash at end of period $ 132,307   $ 120,355  
 

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, 2018
(in thousands) PIRM UWS Corporate Elim CoreLogic
Net income/(loss) from continuing operations $ 20,671 $ 47,754 $ (40,063 ) $ — $ 28,362
Income taxes — — (633 ) — (633 )
Depreciation and amortization 25,735 14,964 5,441 — 46,140
Interest expense, net 279 75 16,808 — 17,162
Share-based compensation 1,086 2,340 5,251 — 8,677
Non-operating losses 500 — 446 — 946
Efficiency investments — — 499 — 499
Transaction costs 1,215 — 826 — 2,041
Amortization of acquired intangibles included in equity in earnings of affiliates 233   —   —   —   233  
Adjusted EBITDA $ 49,719   $ 65,133   $ (11,425 ) $ —   $ 103,427  
 
 
    For the Three Months Ended March 31, 2017
(in thousands) PIRM UWS Corporate Elim CoreLogic
Net income/(loss) from continuing operations $ 14,761 $ 36,193 $ (38,246 ) $ — $ 12,708
Income taxes — — 5,826 — 5,826
Depreciation and amortization 24,860 13,802 4,810 — 43,472
Interest expense, net 519 383 12,891 — 13,793
Share-based compensation 1,418 1,075 9,674 — 12,167
Non-operating (gains)/losses — 362 (1,358 ) — (996 )
Efficiency investments — 2,220 346 — 2,566
Transaction costs — — 258 — 258
Amortization of acquired intangibles included in equity in losses of affiliates 156   —   —   —   156  
Adjusted EBITDA $ 41,714   $ 54,035   $ (5,799 ) $ —   $ 89,950  
 
 

CORELOGIC, INC.

RECONCILIATION OF ADJUSTED EPS

UNAUDITED

   
For the Three Months Ended March 31,
(diluted income per share) 2018   2017
Net income from continuing operations $ 0.34 $ 0.15
Share-based compensation 0.10 0.14
Non-operating losses/(gains) 0.01 (0.01 )
Efficiency investments 0.01 0.03
Transaction costs 0.02 —
Depreciation and amortization of acquired software and intangibles 0.22 0.20
Income tax effect on adjustments (0.18 ) (0.14 )
Adjusted EPS $ 0.52   $ 0.37  
 
 

CORELOGIC, INC.

RECONCILIATION TO FREE CASH FLOW

UNAUDITED

 
(in thousands)    

For the Twelve Months Ended
March 31, 2018

Net cash provided by operating activities - continuing operations $ 384,479
Purchases of property and equipment (41,777 )
Purchases of capitalized data and other intangible assets (36,093 )
Free Cash Flow $ 306,609  
 

CLGX-F


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