CoreLogic Reports Fourth Quarter and Full-Year 2012 Financial Results
Email Dan Smith
February 21, 2013, Irvine, Calif. –
Record Fourth Quarter and Full-Year Revenue, Operating and Net Income and Earnings per Share Delivered
Fourth Quarter Highlights
- Revenues up 18.8% to $410.4 million fueled by double-digit growth in Mortgage Origination Services and Data and Analytics segments.
- Operating income up 211.5% to $48.1 million reflecting higher revenues, the benefit of operating leverage and cost reduction programs.
- Adjusted EBITDA up 49.5% to $106.4 million; adjusted EBITDA margin of 25.9%, up 530 basis points.
- Net income from continuing operations and diluted EPS from continuing operations of $16.6 million and $0.17 per share, up from net loss of $6.3 million and $0.06 per share, respectively. Adjusted EPS of $0.36, up 140.0%.
- Revenues up 17.1% to $1,567.6 million reflecting growth in all business segments.
- Operating income up 150.6% to $222.3 million reflecting higher revenues, the benefit of operating leverage and cost reduction programs.
- Adjusted EBITDA up 54.5% to $450.5 million; adjusted EBITDA margin of 28.7%, up 690 basis points.
- Net income from continuing operations up 129.7% to $122.9 million. Diluted EPS from continuing operations up 147.9% to $1.19 and adjusted EPS up 116.4% to $1.58. Higher net income and EPS reflect strong operating results and share repurchases.
- Company completed repurchase of 10 million common shares and reduced debt by $115.9 million.
Irvine, Calif., February 21, 2013—CoreLogic® (NYSE:CLGX), a leading residential property information, analytics and services provider, today reported financial results for the full year and quarter ended December 31, 2012.
“2012 was an exceptional year for CoreLogic. We are entering 2013 a higher-growth, higher-margin company that is capitalizing on the opportunities presented by a gradually improving housing market. Despite market forecasts indicating a reduction in loan origination volumes, we believe CoreLogic is positioned to deliver revenue and profit growth in 2013,” said Anand Nallathambi, President and Chief Executive Officer of CoreLogic. “Over the course of 2013, we expect to continue to reinvest in strategic growth areas and our technology transformation initiatives, and to return capital to our shareholders.”
“We delivered record financial results in 2012. For the fourth quarter, we achieved double-digit top and bottom-line growth driven by strong origination volumes, accelerating growth of Data and Analytics revenues and the successful execution of our Project 30 cost reduction plan. We are exiting 2012 with significant financial flexibility and our focus remains squarely on profitable top-line growth, margin expansion and free cash flow generation," said Frank Martell, Chief Financial Officer of CoreLogic.
Fourth Quarter Financial Highlights
Consolidated fourth quarter revenues increased $65.0 million or 18.8% to $410.4 million. Mortgage Origination Services segment (MOS) revenues grew $48.2 million or 37.6% to $176.4 million as a result of increased market demand for credit and tax services and flood certifications, market-share gains and improved pricing in certain product lines. Data & Analytics segment (D&A) revenues increased $17.8 million or 12.3% to $162.4 million driven principally by higher demand for property-related information and analytics as well as advisory services related to assisting clients with regulatory compliance. Asset Management and Processing Services segment (AMPS - previously Default Services) revenues of $77.2 million were down 2.1% or $1.7 million reflecting lower field services revenues, partially offset by growth in loss mitigation and collateral solutions revenues.
Operating income totaled $48.1 million for the fourth quarter of 2012 compared with $15.4 million for the fourth quarter of 2011. The increase in operating income was due primarily to revenue growth, increased operating leverage and cost reductions which more than offset cash investments of $6.4 million, one-time non-cash charges of $4.4 million related to the Technology Transformation Initiative (TTI) and other non-recurring restructuring charges of $7.8 million. Fourth quarter 2012 operating income margins were 11.7% compared with 4.5% for the fourth quarter of 2011. Fourth quarter 2011 operating income included one-time impairment charges associated with facility consolidations of $14.2 million, one-time investments in improving operating efficiency and the review of strategic alternatives of $7.1 million and Project 30-related severance of $6.2 million.
Fourth quarter 2012 net income from continuing operations totaled $16.6 million compared with a loss of $6.3 million for the same prior year period. The increase in net income from continuing operations was principally attributable to revenue growth, margin expansion from operating efficiencies and lower interest expense. Fourth quarter 2011 net income from continuing operations included the after-tax impacts of one-time impairment charges associated with facility consolidations, investments in improving operating efficiency and Project 30-related severance discussed previously.
Diluted earnings per share (EPS) from continuing operations totaled $0.17 for the fourth quarter of 2012 compared with a loss of $0.06 in the fourth quarter of 2011. Adjusted diluted EPS totaled $0.36, which represented a $0.21 increase over the same 2011 period. Increases in EPS and adjusted EPS reflect higher revenue and profit margins as well as the impact of share repurchases.
Adjusted EBITDA totaled $106.4 million in the fourth quarter 2012, up $35.2 million or 49.5% from fourth quarter 2011. Fourth quarter 2012 adjusted EBITDA included cash investments of $6.4 million related to the launch of the TTI. The Company's fourth quarter 2012 adjusted EBITDA margin was 25.9% compared with 20.6% in the fourth quarter of 2011. Fourth quarter 2012 adjusted EBITDA margin excluding TTI cash investment was 27.5%. MOS adjusted EBITDA increased 55.5% to $68.4 million compared with prior-year levels fueled by higher origination volumes, market share gains and cost reductions. D&A adjusted EBITDA totaled $43.3 million, a 4.8% increase from fourth quarter 2011 as growth in advisory services revenues and increased demand for property valuation and analytical solutions more than offset increased reinvestment in new product and service capabilities. Adjusted EBITDA attributable to AMPS was $9.7 million, a 4.6% increase.
Cost Reduction Programs
Full-year 2012 cost reductions related to the Company's previously announced Project 30 program were approximately $62.2 million. Project 30 cost savings relate primarily to workforce reductions in corporate shared services and information technology (IT), the outsourcing of certain IT and business process functions and cuts in spending on real estate and outside services.
During 2012, CoreLogic launched the TTI which represents an expansion and extension of Project 30. The primary objective of the TTI is to convert the Company's existing technology infrastructure to a new platform which is expected to provide CoreLogic with new functionality, increased performance and a reduction in application management and development costs. Fourth-quarter and full-year charges related to TTI implementation totaled $10.8 million and $33.2 million, respectively.
Liquidity and Capital Resources
At December 31, 2012, the Company had cash and cash equivalents of $148.9 million compared with $259.3 million at December 31, 2011. The principal drivers of the change in cash balances during 2012 follow:
- Free cash flow (FCF) totaled $277.8 million for the full year 2012, which represented 61.7% 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.
- During the second and third quarters of 2012, CoreLogic repurchased 10 million common shares for a total of $226.6 million.
- During December 2012, the Company acquired CDS Business Mapping, LLC for $78.0 million in cash.
- Total debt as of December 31, 2012 was $792.4 million, down $115.9 million from December 31, 2011. The reduction in outstanding debt was primarily the result of the Company's previously-announced debt reduction plan completed during the first half of 2012.
As of December 31, 2012, the Company had available capacity on its revolving credit facility of approximately $500.0 million.
Segment and Financial Reporting
As part of CoreLogic's ongoing focus on enhancing its business operations and financial reporting, the Company made the following changes to its financial reporting commencing during the fourth quarter of 2012:
- The Company's geo-spatial property data and analytics business operations are now reported as part of the D&A segment. This operation was initially launched as part of the Company's flood zone certification operations and, as a result, was previously reported in the MOS segment. The CDS Business Mapping, LLC acquisition, along with the growth in our existing geo-spatial operations, has resulted in CoreLogic entering 2013 as a leading provider of precise location-based data and analytics to the property and casualty insurance, energy and telecommunications industries.
- Reflecting a change in business mix away from default-related business process outsourcing toward asset management, valuation and loss mitigation services, the Company has renamed its Default Services segment Asset Management and Processing Solutions or AMPS.
- The Company has migrated to a functional operating statement which includes expense categories for costs of services and selling, general and administrative.
The Company believes this updated reporting convention will facilitate the review and analysis of its results. Three years of reclassified quarterly segment results (on an unaudited basis) can be accessed at http://investor.corelogic.com.
The CoreLogic press release announcing its financial results for the fourth quarter and full-year 2012 is available to download as a PDF by clicking the link below.
CoreLogic Reports Fourth Quarter and Full-Year 2012 Financial Results
CoreLogic management will host a live webcast and conference call on Friday, February 22, 2013, 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: 1-866-543-6408 for U.S./Canada callers or 617-213-8899 for international callers. The Conference ID for the call is 75063583.
Additional detail on the Company's fourth 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 1-888-286-8010 for U.S./Canada participants or 617-801-6888 for international participants using Conference ID 66504121.
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CoreLogic (NYSE: CLGX) is a leading property information, analytics and services provider in the United States and Australia. The Company's combined data from public, contributory, and proprietary sources includes over 3.3 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, transportation and government. 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 seven countries. 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 overall financial performance, including future revenue and profit growth, future margin improvement, future adjusted EBITDA and adjusted EPS performance, and future free cash flow generation and margin expansion, our ability to meet our 2013 business, strategic growth and financial objectives and generate longer-term positive returns including return on capital for our stockholders; the Company's full-year expected results and 2013 financial guidance; estimated future cost savings and the impact thereof; mortgage and housing market trends, including mortgage origination and mortgage delinquency volumes; net operating expense reductions, expected non-recurring cash and non-cash charges; and targeted cost reductions including Project 30 and the Technology Transformation Initiative. 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 are set forth in 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 or increase in prices for data from various external sources; government legislation, regulations and the level of regulatory scrutiny affecting our customers or us, including the Consumer Financial Protection Bureau and with respect to 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 lending industries and the economy generally, together with our customer concentration and the impact of these factors thereon; our growth strategy and cost reduction plan and our ability to significantly decrease future allocated costs and other amounts in connection therewith; risks related to the outsourcing of services and our international operations; the inability to control the operations and dividend policies of our partially-owned affiliates; impairments in our goodwill or other intangible assets; and the restrictive covenants in the agreements governing certain of our outstanding indebtedness. 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 comparable GAAP financial measures. These non-GAAP measures are not in accordance with or a substitute for, U.S. GAAP.
The Company believes that its presentation of non-GAAP measures, such as adjusted EBITDA and adjusted EPS 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 one-time 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, non-operating gains/losses, and other adjustments plus pretax equity in earnings of affiliates, tax affected at an assumed effective tax rate of 40%. Adjusted EPS is derived by dividing adjusted net income by diluted weighted shares. Other firms may calculate non-GAAP measures differently than CoreLogic, which limits comparability between companies.