IRVINE, Calif., April 22, 2015 - 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.
The CoreLogic press release announcing its financial results for the first quarter 2015 is available to download as a PDF by clicking the link below.
CoreLogic Reports First Quarter 2015 Financial Results
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.
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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.