IRVINE, Calif.--(BUSINESS WIRE)--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, 2017.
Strong Operating Performance Highlighted by Significant Market Outperformance, Aggressive Cost Management and High Cash Flow Conversion
-- Revenues of $440 million were down 3% as market share gains, pricing actions and new products were offset by the impact of an estimated 20% decline in U.S. mortgage application volumes.
-- Operating income from continuing operations of $33 million was down 44% as operating gains in insurance and spatial solutions, international operations and RMW partially offset lower mortgage application volumes, cost management program-related charges, and the timing of technology and compliance investments.
-- Net income from continuing operations of $13 million, down 54%. Diluted EPS from continuing operations of $0.15 per share. Adjusted EPS of $0.37 per share.
-- Adjusted EBITDA totaled $90 million, 16% lower than prior year.
-- Repurchased 0.5 million common shares for $20 million.
“CoreLogic delivered a strong operating performance in the first quarter of 2017. In terms of revenues, we substantially offset the impact of a 20% decline in U.S. mortgage applications through a combination of market share gains, pricing actions and new product rollouts across our core solution sets,” said Frank Martell, President and Chief Executive Officer of CoreLogic. “During the quarter, we also took aggressive actions to cut costs and drive further productivity into the organization including reducing our global staffing levels approximately 3%. We also continued to invest in enhancing and scaling our solution sets as well as expanding our innovation, technology and compliance capabilities. I believe these investments will help us to drive top-line growth, margins and cash flow and, ultimately, ensure our market leadership well into the future.”
“Our relentless focus on building scaled and unique market leading solutions as well as driving for best-in-class operational and cost efficiencies has resulted in the creation of a durable and highly cash generative business model. This model has allowed us to return over $1 billion to our stockholders over the past 6 years. We added to this total in the first quarter by returning an additional $20 million in capital through our ongoing share repurchase program,” Martell added.
Financial Highlights
First quarter reported revenues totaled $440 million compared with $454 million in the same 2016 period. During the quarter, market share and pricing-related gains as well as contributions from new products in both the Property Intelligence (PI) and the Risk Management and Work Flow (RMW) segments helped to offset the impact of an estimated 20% decline in U.S. mortgage application volumes, lower demand for project-related advisory services and the wind-down of non-core product lines. PI revenues declined 6% to $227 million in the first quarter driven primarily by lower valuation solutions revenues due to reduced U.S. mortgage application volumes and planned vendor diversification by a significant appraisal management client. PI revenues were also impacted by lower demand for project-related advisory services. PI revenues attributable to insurance, spatial solutions, realtor solutions, and international were higher in the first quarter. RMW revenues totaled $214 million, consistent with 2016 levels, as the benefits from organic growth offset the unfavorable impacts from lower mortgage application volumes and the wind-down of non-core product lines.
Operating income totaled $33 million for the first quarter compared with $58 million in the same 2016 period. The year-over-year decline in operating income was principally attributable to lower mortgage application volumes as well as charges associated with cost reduction programs including severance and real estate consolidation costs and investments in technology, innovation, and compliance programs and capabilities discussed earlier. First quarter operating income also included a one-time acceleration of stock-based compensation of $4 million that had no prior year counterpart.
First quarter net income from continuing operations totaled $13 million compared with $28 million in the same 2016 period. The decline was primarily the result of lower levels of income from operating activities discussed previously, partially offset by lower interest costs and tax provisions. Diluted EPS from continuing operations totaled $0.15 for the first quarter of 2017 compared with $0.31 in 2016. Adjusted diluted EPS totaled $0.37, down 23% reflecting lower first quarter operating income levels partially offset by the benefit of lower interest costs and tax provisions and share repurchases.
Adjusted EBITDA totaled $90 million in the first quarter compared with $107 million in the same prior year period. The 16% year-over-year decline in adjusted EBITDA was principally the result of lower mortgage application volumes, higher technology, innovation, and compliance costs and charges associated with cost reduction programs. PI segment adjusted EBITDA totaled $45 million compared to $50 million in 2016. The reduction in PI adjusted EBITDA was attributable to the impact of lower mortgage application volumes, planned vendor diversification by a significant appraisal management client, and the impact of lower demand for project-related advisory services. RMW adjusted EBITDA was $51 million, 18% below 2016 levels, as the impact of lower mortgage application volumes and higher compliance and cost management-related expenses were partially offset by continued organic growth and productivity benefits.
Liquidity and Capital Resources
At March 31, 2017, the Company had cash and cash equivalents of $103 million compared with $72 million at December 31, 2016. Total debt as of March 31, 2017 was $1,602 million compared with $1,619 million as of December 31, 2016. As of March 31, 2017, the Company had available capacity on its revolving credit facility of $248 million.
Net cash provided by operating activities from continuing operations for the twelve months ended March 31, 2017 was $423 million. Free cash flow (FCF) for the twelve months ended March 31, 2017 totaled $344 million, which represented 71% 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.
For the quarter ending March 31, 2017, the Company repurchased 0.5 million of its common shares for $20 million.
Teleconference/Webcast
CoreLogic management will host a live webcast and conference call on Wednesday, April 26, 2017, 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: 1-866-807-9684 for U.S./Canada callers or 1-412-317-5415 for international callers.
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 10 days and also 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 10103592.
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 statements that the Company’s investments will help it drive top-line growth, margins and cash flow and ensure market leadership; the belief that the Company’s efforts have resulted in the creation of a durable and highly cash generative business model; statements regarding the Company's overall financial performance, including future revenue and profit growth, and statements about the Company's margin and cash flow profile. 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, 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 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 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 CoreLogic'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 diluted net income from continuing operations per 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 35% and 36% for 2017 and 2016, 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) | 2017 | 2016 | ||||||
| Operating revenues | $ | 439,851 | $ | 453,543 | ||||
| Cost of services (excluding depreciation and amortization shown below) | 251,966 | 245,377 | ||||||
| Selling, general and administrative expenses | 111,850 | 110,297 | ||||||
| Depreciation and amortization | 43,472 | 39,644 | ||||||
| Total operating expenses | 407,288 | 395,318 | ||||||
| Operating income | 32,563 | 58,225 | ||||||
| Interest expense: | ||||||||
| Interest income | 338 | 627 | ||||||
| Interest expense | 14,131 | 14,924 | ||||||
| Total interest expense, net | (13,793 | ) | (14,297 | ) | ||||
| Gain/(loss) on investments and other, net | 935 | (521 | ) | |||||
| Income from continuing operations before equity in losses of affiliates and income taxes | 19,705 | 43,407 | ||||||
| Provision for income taxes | 6,274 | 15,779 | ||||||
| Income from continuing operations before equity in losses of affiliates | 13,431 | 27,628 | ||||||
| Equity in losses of affiliates, net of tax | (723 | ) | (90 | ) | ||||
| Net income from continuing operations | 12,708 | 27,538 | ||||||
| Gain/(loss) from discontinued operations, net of tax | 2,417 | (58 | ) | |||||
| Gain from sale of discontinued operations, net of tax | 313 | — | ||||||
| Net income | $ | 15,438 | $ | 27,480 | ||||
| Basic income per share: | ||||||||
| Net income from continuing operations | $ | 0.15 | $ | 0.31 | ||||
| Gain/(loss) from discontinued operations, net of tax | 0.03 | — | ||||||
| Gain from sale of discontinued operations, net of tax | — | — | ||||||
| Net income | $ | 0.18 | $ | 0.31 | ||||
| Diluted income per share: | ||||||||
| Net income from continuing operations | $ | 0.15 | $ | 0.31 | ||||
| Gain/(loss) from discontinued operations, net of tax | 0.03 | — | ||||||
| Gain from sale of discontinued operations, net of tax | — | — | ||||||
| Net income | $ | 0.18 | $ | 0.31 | ||||
| Weighted-average common shares outstanding: | ||||||||
| Basic | 84,432 | 88,310 | ||||||
| Diluted | 86,341 | 89,919 | ||||||
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 | 2017 | 2016 | ||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 102,932 | $ | 72,031 | ||||
| Accounts receivable (less allowance for doubtful accounts of $7,946 and $8,857 as of March 31, 2017 and December 31, 2016, respectively) | 258,080 | 269,229 | ||||||
| Prepaid expenses and other current assets | 38,108 | 43,060 | ||||||
| Income tax receivable | 9,646 | 6,905 | ||||||
| Assets of discontinued operations | 5,067 | 662 | ||||||
|
Total current assets |
413,833 | 391,887 | ||||||
| Property and equipment, net | 440,395 | 449,199 | ||||||
| Goodwill, net | 2,115,619 | 2,107,255 | ||||||
| Other intangible assets, net | 466,133 | 478,913 | ||||||
| Capitalized data and database costs, net | 330,935 | 327,921 | ||||||
| Investment in affiliates, net | 39,638 | 40,809 | ||||||
| Deferred income tax assets, long-term | 1,398 | 1,516 | ||||||
| Restricted cash | 17,423 | 17,943 | ||||||
| Other assets | 94,229 | 92,091 | ||||||
| Total assets | $ | 3,919,603 | $ | 3,907,534 | ||||
| Liabilities and Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 186,155 | $ | 168,284 | ||||
| Accrued salaries and benefits | 81,732 | 107,234 | ||||||
| Deferred revenue, current | 294,845 | 284,622 | ||||||
| Current portion of long-term debt | 122,634 | 105,158 | ||||||
| Liabilities of discontinued operations | 3,026 | 3,123 | ||||||
|
Total current liabilities |
688,392 | 668,421 | ||||||
| Long-term debt, net of current | 1,463,938 | 1,496,889 | ||||||
| Deferred revenue, net of current | 492,358 | 487,134 | ||||||
| Deferred income tax liabilities, long term | 129,738 | 120,063 | ||||||
| Other liabilities | 129,325 | 132,043 | ||||||
| Total liabilities | 2,903,751 | 2,904,550 | ||||||
| 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; 84,630 and 84,368 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively | 1 | 1 | ||||||
| Additional paid-in capital | 382,910 | 400,452 | ||||||
| Retained earnings | 740,387 | 724,949 | ||||||
| Accumulated other comprehensive loss | (107,446 | ) | (122,418 | ) | ||||
| Total stockholders' equity | 1,015,852 | 1,002,984 | ||||||
| Total liabilities and equity | $ | 3,919,603 | $ | 3,907,534 | ||||
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) | 2017 | 2016 | ||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 15,438 | $ | 27,480 | ||||
| Less: Income/(loss) from discontinued operations, net of tax | 2,417 | (58 | ) | |||||
| Less: Gain from sale of discontinued operations, net of tax | 313 | — | ||||||
| Net income from continuing operations | 12,708 | 27,538 | ||||||
| Adjustments to reconcile net income from continuing operations to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 43,472 | 39,644 | ||||||
| Amortization of debt issuance costs | 1,440 | 1,485 | ||||||
| Provision for bad debt and claim losses | 3,758 | 2,895 | ||||||
| Share-based compensation | 12,167 | 9,543 | ||||||
| Excess tax benefit related to stock options | — | (1,265 | ) | |||||
| Equity in losses of affiliates, net of taxes | 723 | 90 | ||||||
| Gain on sale of property and equipment | (3 | ) | (8 | ) | ||||
| Deferred income tax | 8,911 | 5,143 | ||||||
| (Gain)/loss on investments and other, net | (935 | ) | 521 | |||||
| Change in operating assets and liabilities, net of acquisitions: | ||||||||
| Accounts receivable | 10,952 | (4,767 | ) | |||||
| Prepaid expenses and other current assets | 4,952 | (1,332 | ) | |||||
| Accounts payable and accrued expenses | (11,267 | ) | (15,992 | ) | ||||
| Deferred revenue | 15,447 | 8,491 | ||||||
| Income taxes | (2,293 | ) | 9,736 | |||||
| Dividends received from investments in affiliates | — | 5,183 | ||||||
| Other assets and other liabilities | (4,354 | ) | (205 | ) | ||||
| Net cash provided by operating activities - continuing operations | 95,678 | 86,700 | ||||||
| Net cash (used in)/provided by operating activities - discontinued operations | (25 | ) | 27 | |||||
| Total cash provided by operating activities | $ | 95,653 | $ | 86,727 | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of subsidiary shares from noncontrolling interests | $ | — | $ | (18,023 | ) | |||
| Purchases of property and equipment | (8,671 | ) | (9,810 | ) | ||||
| Purchases of capitalized data and other intangible assets | (8,441 | ) | (9,021 | ) | ||||
| Purchases of investments | — | (440 | ) | |||||
| Proceeds from sale of property and equipment | 3 | 8 | ||||||
| Change in restricted cash | 520 | (117 | ) | |||||
| Net cash used in investing activities - continuing operations | (16,589 | ) | (37,403 | ) | ||||
| Net cash provided by investing activities - discontinued operations | — | — | ||||||
| Total cash used in investing activities | $ | (16,589 | ) | $ | (37,403 | ) | ||
| Cash flows from financing activities: | ||||||||
| Repayment of long-term debt | $ | (17,641 | ) | $ | (15,830 | ) | ||
| Shares repurchased and retired | (19,837 | ) | — | |||||
| Proceeds from issuance of shares in connection with share-based compensation | 2,390 | 6,296 | ||||||
| Payment of tax withholdings related to net share settlements | (12,262 | ) | (7,178 | ) | ||||
| Excess tax benefit related to stock options | — | 1,265 | ||||||
| Net cash used in financing activities - continuing operations | (47,350 | ) | (15,447 | ) | ||||
| Net cash provided by financing activities - discontinued operations | — | — | ||||||
|
Total cash used in financing activities |
$ | (47,350 | ) | $ | (15,447 | ) | ||
| Effect of exchange rate on cash | (814 | ) | 137 | |||||
| Net change in cash and cash equivalents | $ | 30,900 | $ | 34,014 | ||||
| Cash and cash equivalents at beginning of period | 72,031 | 99,090 | ||||||
| Less: Change in cash and cash equivalents - discontinued operations | (25 | ) | 27 | |||||
| Plus: Cash swept to discontinued operations | (24 | ) | 27 | |||||
| Cash and cash equivalents at end of period | $ | 102,932 | $ | 133,104 | ||||
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, 2017 | ||||||||||||||||||||
| (in thousands) | PI | RMW | Corporate | Elim | CoreLogic | |||||||||||||||
| Net income/(loss) from continuing operations | $ | 8,854 | $ | 42,100 | $ | (38,246 | ) | $ | — | $ | 12,708 | |||||||||
| Income taxes | — | — | 5,826 | — | 5,826 | |||||||||||||||
| Depreciation and amortization | 32,654 | 6,008 | 4,810 | — | 43,472 | |||||||||||||||
| Interest expense | 846 | 56 | 12,891 | — | 13,793 | |||||||||||||||
| Stock-based compensation | 1,801 | 692 | 9,674 | — | 12,167 | |||||||||||||||
| Non-operating losses/(gains) | 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 | $ | 44,673 | $ | 51,076 | $ | (5,799 | ) | $ | — | $ | 89,950 | |||||||||
| For the Three Months Ended March 31, 2016 | ||||||||||||||||||||
| (in thousands) | PI | RMW | Corporate | Elim | CoreLogic | |||||||||||||||
| Net income/(loss) from continuing operations | $ | 16,687 | $ | 52,923 | $ | (42,072 | ) | $ | — | $ | 27,538 | |||||||||
| Income taxes | — | — | 15,933 | — | 15,933 | |||||||||||||||
| Depreciation and amortization | 27,926 | 7,718 | 4,000 | — | 39,644 | |||||||||||||||
| Interest expense | 1,021 | 55 | 13,221 | — | 14,297 | |||||||||||||||
| Stock-based compensation | 2,632 | 1,563 | 5,348 | — | 9,543 | |||||||||||||||
| Non-operating losses/(gains) | 1,100 | — | (2,999 | ) | — | (1,899 | ) | |||||||||||||
| Efficiency investments | — | — | 12 | — | 12 | |||||||||||||||
| Transaction costs | 18 | — | 939 | — | 957 | |||||||||||||||
| Amortization of acquired intangibles included in equity in losses of affiliates | 723 | — | — | — | 723 | |||||||||||||||
| Adjusted EBITDA | $ | 50,107 | $ | 62,259 | $ | (5,618 | ) | $ | — | $ | 106,748 | |||||||||
| CORELOGIC, INC. | ||||||||
| RECONCILIATION OF ADJUSTED EPS | ||||||||
| UNAUDITED | ||||||||
| For the Three Months Ended March 31, | ||||||||
| (diluted income per share) | 2017 | 2016 | ||||||
| Net income from continuing operations | $ | 0.15 | $ | 0.31 | ||||
| Stock-based compensation | 0.14 | 0.11 | ||||||
| Non-operating gains | (0.01 | ) | (0.02 | ) | ||||
| Efficiency investments | 0.03 | — | ||||||
| Transaction costs | — | 0.01 | ||||||
| Depreciation and amortization of acquired software and intangibles | 0.20 | 0.16 | ||||||
| Amortization of acquired intangibles included in equity in losses of affiliates | — | 0.01 | ||||||
| Income tax effect on adjustments | (0.14 | ) | (0.10 | ) | ||||
| Adjusted EPS | $ | 0.37 | $ | 0.48 | ||||
| CORELOGIC, INC. | |||||||||||||
| RECONCILIATION TO FREE CASH FLOW | |||||||||||||
| UNAUDITED | |||||||||||||
| (in thousands) |
For the Twelve Months |
||||||||||||
| Net cash provided by operating activities - continuing operations | $ | 422,981 | |||||||||||
| Purchases of property and equipment | (44,072 | ) | |||||||||||
| Purchases of capitalized data and other intangible assets | (34,927 | ) | |||||||||||
| Free Cash Flow | $ | 343,982 | |||||||||||
CLGX-F
