CoreLogic (NYSE: CLGX), a leading global provider of property information, insight, analytics and data-enabled solutions, today reported financial results for the quarter ended June 30, 2018. Operating and financial highlights for the second quarter appear below.
“CoreLogic delivered a very strong set of operating and financial results in the second quarter and first half of 2018. We grew the top line, expanded operating income and adjusted EBITDA margins and generated strong free cash flow despite lower U.S. mortgage activity. I believe this is a clear and important demonstration of the durability and resiliency of our business model as well as the progress we are making toward achieving our longer-term profitability targets,” said Frank Martell, President and Chief Executive Officer of CoreLogic. "We head into the balance of 2018 and beyond, 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. We remain focused on employing our market leadership to secure opportunities presented by the evolving purchase-driven mortgage cycle in the U.S. In addition, our insurance & spatial solutions and international businesses provide us with opportunities for high margin non-cyclical growth,” Martell added. Second Quarter Financial Summary Second quarter revenues totaled $488 million compared with $474 million in the same 2017 period, an increase of 3%. PIRM revenues rose 4% to $183 million driven primarily by organic growth in property insights, including real estate-related and international operations, as well as contributions from insurance & spatial solutions acquisitions completed in 2017. UWS segment revenues were up 3% to $308 million despite a more than 10% decline in U.S. mortgage loan unit volumes and the impact of the wind down of certain non-core product lines. The positive year-over-year growth trend resulted principally from organic growth and the benefit of accelerated revenue recognition (approximately $23 million) resulting from the amendment of a long-term contract. UWS revenue growth also benefited from the scaling of CoreLogic’s valuations solutions platform through the acquisitions of Mercury Network and a la mode technologies (ALM). Operating income totaled $90 million for the second quarter compared with $78 million for the second quarter of 2017. The 14% year-over-year increase in operating income was principally attributable to revenue growth upsides discussed previously, favorable business mix and gains from cost management and productivity programs. Second quarter operating income margin was up approximately 180 basis points to 18%. Second quarter net income from continuing operations totaled $59 million compared with $41 million in the same 2017 period. The increase was primarily attributable to operating upsides outlined previously. Second quarter diluted EPS from continuing operations totaled $0.71 compared with $0.48 in 2017. Adjusted diluted EPS totaled $1.00, up from $0.72 in the second quarter of 2017. Adjusted EBITDA aggregated $159 million in the second quarter compared with $135 million in the prior year period. The 18% increase in adjusted EBITDA was principally attributable to revenue growth, improved business mix and cost productivity partially offset by the impact of lower U.S. mortgage market volumes. PIRM adjusted EBITDA increased 2% to $60 million. UWS adjusted EBITDA rose 26% to $104 million driven by organic growth, including the previously mentioned revenue recognition benefit of approximately $23 million resulting from the amendment of a long-term contract, as well as the scaling of CoreLogic’s valuations solutions platform, which more than offset lower U.S. mortgage loan unit volumes and the wind down of certain non-core product lines. Adjusted EBITDA margin was up approximately 410 basis points to 33%. 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 margins in line with long term strategic targets by improving operating efficiency and accelerating 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 June 30, 2018, the Company had cash and cash equivalents of $85 million compared with $119 million at December 31, 2017. Total debt as of June 30, 2018 was $1,830 million versus $1,777 million as of December 31, 2017. As of June 30, 2018, the Company had available capacity on its revolving credit facility of $580 million. Net operating cash provided by continuing operations for the twelve months ended June 30, 2018 was $392 million. Free cash flow (FCF) for the twelve months ended June 30, 2018 totaled $314 million, which represented 61% 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 April 2018, the Company acquired ALM for $120 million which was funded through available capacity on its revolving credit facility. ALM is headquartered in Oklahoma City and provides subscription based software solutions to more than 40,000 appraiser professionals across the United States. In the second quarter of 2018, the Company repurchased 872,000 of its common shares for $45 million.
Updated Financial GuidanceBased on the actual first half financial results and currently available projections of market conditions including U.S. origination market volumes for the second half of 2018, the Company is providing the following updates to its 2018 full year guidance:
($ in millions except adjusted EPS)
January 31, 2018Outlook/Guidance
July 25, 2018Guidance Update
$1,825 - $1,875
$455 - $485
$480 - $500
$2.45 - $2.65
$2.70 - $2.85
(1) Definition of adjusted results, as well as other non-GAAP financial measures used by management, is included in the Use of Non-GAAP Financial Measures section found at the end of the release.
The revised 2018 guidance ranges provided above reflect the following updated estimates and assumptions:
Teleconference/WebcastCoreLogic management will host a live webcast and conference call on Thursday, July 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 10121379.
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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 adjusted 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 per diluted share, adjusted for stock compensation, amortization of acquisition-related intangibles, non-operating gains/losses, and other adjustments, then 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.