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Press release from PR Newswire

CoreLogic Reports First Quarter 2012 Financial Results

Wednesday, April 25, 2012

CoreLogic Reports First Quarter 2012 Financial Results16:15 EDT Wednesday, April 25, 2012Delivers Strong Double-Digit Growth in Revenue, Operating and Net Income from Continuing Operations and Earnings per Diluted Share - Revenues up 13.2% to $358.1 million fueled by double-digit growth in Data and Analytics and Mortgage Origination Services segments. - Operating income from continuing operations up 70.2% to $45.2 million reflecting higher revenues and benefits from cost reduction programs. - Net income from continuing operations of $29.1 million and earnings per diluted share of $0.27, up 34.5% and 42.1%, respectively. - Adjusted EBITDA up 45.2% to $100.2 million; adjusted EBITDA margins of 28.0%, up 620 basis points. Adjusted earnings per diluted share of $0.32, up 68.4%. - Company to repurchase at least 5 million shares of common stock over the balance of 2012.SANTA ANA, Calif., April 25, 2012 /PRNewswire/ -- CoreLogic (NYSE: CLGX), a leading provider of information, analytics and business services, today reported financial results for the quarter ended March 31, 2012.(Logo: http://photos.prnewswire.com/prnh/20100609/CLLOGO)Anand Nallathambi, President and Chief Executive Officer, said, "CoreLogic delivered double-digit increases in revenue, operating and net income and adjusted EBITDA in the first quarter of 2012.  We grew our Data and Analytics and Mortgage Origination Services segments over 20%, achieved significant cost efficiencies and strengthened our capital structure. The Company's first quarter results clearly demonstrate the growth potential, operating leverage and resiliency resident in our "must have" data and information assets and mortgage origination related businesses."Nallathambi continued, "Our strong operating results are a clear validation that CoreLogic is executing against the strategic business plan we established in 2011.  CoreLogic has now delivered accelerating revenue and earnings growth for the third quarter in a row.""CoreLogic continued to aggressively reduce costs in the first quarter.  We delivered a 620 basis point expansion in adjusted EBITDA margins through a combination of improved operating leverage and achievement of our Project 30 targets.  We also increased free cash flow conversion to almost 50% of adjusted EBITDA and paid down approximately $52 million in debt," added Frank Martell, Chief Financial Officer.  "We believe CoreLogic is well positioned to deliver against our business and financial objectives in 2012 and to return capital to our shareholders."First Quarter Financial HighlightsRevenues increased 13.2% or $41.8 million to $358.1 million for the quarter ended March 31, 2012.  Data & Analytics (D&A) revenues were up 20.3% to $141.1 million primarily as a result of the 2011 acquisitions of RP Data and Tarasoft and growth in analytics and data licensing revenues.  Mortgage Origination Services (MOS) revenues jumped 21.6% to $147.7 million fueled principally by the impact of increased demand for credit and tax services and flood certifications and the March 2011 acquisition of Dorado Network Systems.  Default Services (DS) revenues of $75.0 million were down 9.7% from the same prior year period reflecting reduced market activity and lower technology and business process outsourcing revenues, partially offset by higher field services volumes.  Operating income from continuing operations totaled $45.2 million for the first quarter of 2012 compared with $26.6 million for the first quarter of 2011.  This increase of 70.2% was driven by higher revenues and the benefit of ongoing cost reduction and productivity initiatives.  First quarter 2012 operating income margins increased 420 basis points to 12.6%.  First quarter 2012 operating income included approximately $2.2 million in one-time costs related to the strategic review process concluded on February 27, 2012.First quarter 2012 net income from continuing operations totaled $29.1 million, a $7.4 million or 34.5% increase from prior year.  First quarter 2011 net income from continuing operations benefited from an after-tax gain of $14.9 million related to the sale of the Company's minority investment in DealerTrack Holdings, Inc. which was partially offset by a $14.0 million adjustment to deferred tax assets associated primarily with the acquisition of Dorado. First quarter 2012 adjusted EBITDA totaled $100.2 million, a 45.2% improvement from the same prior year period.  Adjusted EBITDA margin for the first quarter was 28.0%, up from 21.8% in the first quarter of 2011.  D&A segment adjusted EBITDA totaled $41.0 million, a $10.3 million or 33.6% increase from the prior year period attributable principally to the acquisition of RP Data and benefits from Project 30-related cost reductions.  Adjusted EBITDA for the MOS segment increased $23.3 million or 71.8% to $55.8 million driven primarily by higher origination volumes and cost reductions.  Adjusted EBITDA attributable to the DS segment was $11.2 million, a 30.3% decline mainly due to lower revenues.Diluted earnings per share (EPS) from continuing operations totaled $0.27 for the first quarter of 2012, an increase of $0.08 or 42.1% from the first quarter of 2011.  Adjusted diluted EPS totaled $0.32, which represented a $0.13 or 68.4% increase over the same 2011 period.  Increases in diluted EPS and adjusted diluted EPS reflect higher revenues and improved margins as well as the impact of share repurchases completed during 2011.Cost Reduction ProgramsAs part of its previously announced Project 30 program, the Company targeted to reduce certain costs by $60 million in 2012 in addition to the $20 million in savings achieved during 2011. Actual and planned cost reductions 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. Reductions associated with Project 30 totaled approximately $13.5 million during the first quarter of 2012, which is in line with expectations.  During first quarter 2012, CoreLogic reduced its total U.S. workforce approximately 4% including an 18% reduction in corporate shared services staff.CoreLogic recently entered into a multi-year strategic partnership with a leading specialist in comprehensive procurement solutions. The Company expects to reduce spending on purchased goods and services by approximately $20 million compared with current levels over the course of this five-year arrangement.Liquidity and Capital ResourcesAt March 31, 2012, the Company had unrestricted cash of $256.4 million compared with $259.3 million at December 31, 2011.  Total debt as of March 31, 2012 was $856.7 million, down $51.6 million from December 31, 2011, with available capacity on the Company's credit facility of approximately $498.3 million. The reduction in outstanding debt was the result of the Company's plan to reduce indebtedness, through voluntary and scheduled principal payments, by at least $100.0 million during the first half of 2012.Free cash flow for the first quarter of 2012  totaled $49.2 million, which represented approximately 49.1% of adjusted EBITDA. Free cash flow is defined as net cash provided by continuing operating activities, which was $69.7 million for the first quarter of 2012, less capital expenditures for purchases of property and equipment, capitalized data and other intangible assets, which totaled $20.5 million during the same period.The Company expects to repurchase at least 5 million shares of its common stock on an opportunistic basis over the balance of 2012 as part of an existing Board of Directors authorization.Non-GAAP MeasuresThis press release contains certain non-GAAP measures which the Company believes provide a useful supplement to its financial statements reported in accordance with U.S. GAAP.  Concurrent with the release of its first quarter financial results, the Company will no longer report adjusted revenues.  In addition, as previously discussed, CoreLogic has reduced the number of adjustments to its non-GAAP EBITDA metric.  The Company believes these changes will simplify the external review and analysis of its financial results. Recast historical segment results (on an unaudited basis) can be accessed at http://investor.corelogic.com.  For more information about the Company's non-GAAP financial measures, refer to the discussion on the Use of Non-GAAP Financial Measures and the reconciliations of non-GAAP measures to their nearest GAAP equivalents in this release.  Additional information on non-GAAP measures can be found on the quarterly financial supplement on the CoreLogic investor website.Financial GuidanceThe following table sets forth the Company's guidance for 2012:($ in millions, except per share amounts)2012 GuidanceGAAP Revenue(1)$1,400 - $1,450Adjusted EBITDA$340 - $360Adjusted EPS$1.00 - $1.05(1) Previously issued guidance was based on adjusted revenues which included pretax equity in earnings of affiliates.Teleconference/WebcastCoreLogic management will host a live audio webcast on Thursday, April 26, 2012, at 8:00 a.m. Pacific time (11:00 a.m. Eastern time) to discuss financial and business highlights. Interested parties are invited to listen to the event via webcast on the CoreLogic website at http://investor.corelogic.com.  The discussion is also available through dial-in number 1-866-713-8310 for U.S./Canada participants or 617-597-5308 for international participants using Conference ID 62703423. 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 55262266.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.About CoreLogicCoreLogic (NYSE: CLGX) is a leading provider of information, analytics and business services. The Company combines public, contributory and proprietary data to develop predictive decision analytics and provides business services that bring dynamic insight and transparency to the markets it serves. CoreLogic has built one of the largest and most comprehensive U.S. real estate, mortgage application, fraud, and loan performance databases and is a recognized leading provider of mortgage and automotive credit reporting, property tax, valuation, flood determination, and geospatial analytics and services. More than one million users rely on CoreLogic to assess risk, support underwriting, investment and marketing decisions, prevent fraud, and improve business performance in their daily operations. The Company, headquartered in Santa Ana, Calif., has approximately 5,000 employees globally. For more information, visit www.corelogic.com.Safe Harbor / Forward Looking StatementsCertain 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 earnings growth, future margin improvement and future adjusted EBITDA and EPS performance, estimated future cost savings and the impact thereof; mortgage market trends; reduction in indebtedness; expected share repurchase amounts and timing; and anticipated workforce reductions. 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 for the year ended December 31, 2011, 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; 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 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; the restrictive covenants in the agreements governing certain of our outstanding indebtedness; our 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; 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 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 to expected reported 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 EBITDA margin, adjusted net income 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 and income taxes, adjusted for non-cash stock compensation, non-operating gains/losses, and other adjustments plus pretax equity in earnings of affiliates, tax affected at a planned effective tax rate of 40% rate.  Adjusted EPS is derived by dividing adjusted net income by diluted weighted shares. Free cash flow is defined as operating cash flow less capitalized expenditures for property, plant, equipment and data. Other firms may calculate non-GAAP measures differently than CoreLogic limiting comparability between companies.(Additional Financial Data Follow)CORELOGIC, INC.CONDENSED CONSOLIDATED INCOME STATEMENTSUNAUDITEDFor the Three Months EndedMarch 31,(in thousands, except per share amounts)20122011Operating revenues$358,101$316,282External cost of revenues80,38163,941Salaries and benefits137,742140,996Other operating expenses65,26061,732Depreciation and amortization29,49123,037Total operating expenses312,874289,706Income from continuing operations45,22726,576Interest expense:Interest income7001,967Interest expense14,8429,517Total interest expense, net(14,142)(7,550)Gain on investments and other, net1,64130,861Income from continuing operations before equity in earnings of affiliates and income taxes32,72649,887Provision for income taxes13,23833,799Income from continuing operations before equity in earnings of affiliates19,48816,088Equity in earnings of affiliates, net of tax9,4706,334Net income from continuing operations28,95822,422(Loss)/income from discontinued operations, net of tax(8,967)1,651Loss from sale of discontinued operations, net of tax(3,454)?Net income16,53724,073Less: Net (loss)/income attributable to noncontrolling interests(94)817Net income attributable to CoreLogic$16,631$23,256Amounts attributable to CoreLogic stockholders:Net income from continuing operations$29,052$21,605(Loss)/income from discontinued operations, net of tax(8,967)1,651Loss from sale of discontinued operations, net of tax$(3,454)$?Net income attributable to CoreLogic$16,631$23,256Basic income/(loss) per share:Net income from continuing operations$0.27$0.19(Loss)/income from discontinued operations, net of tax(0.08)0.01Loss from sale of discontinued operations, net of tax$(0.03)$?Net income attributable to CoreLogic$0.16$0.20Diluted income/(loss) per share:Net income from continuing operations$0.27$0.19(Loss)/income from discontinued operations, net of tax(0.08)0.01Loss from sale of discontinued operations, net of tax$(0.03)$?Net income attributable to CoreLogic$0.16$0.20Weighted-average common shares outstanding:Basic106,594115,545Diluted107,327116,306Please 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 SHEETSUNAUDITED(in thousands, except per share value)March 31,December 31,Assets20122011Current assets:Cash and cash equivalents$256,359$259,266Marketable securities20,96420,884Accounts receivable (less allowance for doubtful accounts of $22,452 and $17,365 in 2012 and 2011,respectively)220,844213,339Prepaid expenses and other current assets49,47551,659Income tax receivable22,11715,110Deferred tax asset, current39,58439,584Due from First American Financial Corporation ("FAFC"), net578621Assets of discontinued operations42,34955,516Total current assets652,270655,979Property and equipment, net212,494214,237Goodwill, net1,475,1071,472,206Other intangible assets, net158,441164,365Capitalized data and database costs, net305,468304,006Investment in affiliates110,088113,809Deferred income tax assets, long-term36,55338,305Restricted cash22,07222,044Other assets130,379125,120Total assets$3,102,872$3,110,071Liabilities and EquityCurrent liabilities:Accounts payable and accrued expenses$133,563$122,859Accrued salaries and benefits65,02886,444Deferred revenue, current220,830201,689Current portion of long-term debt36,37762,268Liabilities of discontinued operations24,13727,399Total current liabilities479,935500,659Long-term debt, net of current820,356846,027Deferred revenue, net of current311,863338,799Deferred income tax liabilities, long term17,40518,383Other liabilities197,522161,382Total liabilities1,827,0811,865,250Equity:CoreLogic, Inc.'s (CoreLogic) stockholders' equity:Common stock, $0.00001 par value; 180,000 shares authorized; 106,544 and 106,544 sharesissued and outstanding as of March 31, 2012 and December 31, 2011, respectively11Additional paid-in capital1,066,9581,053,447Retained earnings222,817209,389Accumulated other comprehensive loss(16,181)(20,316)Total CoreLogic's stockholders' equity1,273,5951,242,521Noncontrolling interests2,1962,300Total equity1,275,7911,244,821Total liabilities and equity$3,102,872$3,110,071Please 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 STATEMENT OF CASH FLOWSUNAUDITEDFor the Three Months EndedMarch 31,(in thousands)20122011Cash flows from operating activities:Net income$16,537$24,073Less: (Loss)/income from discontinued operations, net of tax(8,967)1,651Less: Loss from sale of discontinued operations, net of tax(3,454)?Income from continuing operations28,95822,422Adjustments to reconcile income from continuing operations to net cash provided by operating activities:Depreciation and amortization29,49123,037Provision for bad debt and claim losses6,4985,424Share-based compensation4,3543,110Equity in earnings of affiliates, net of taxes(9,470)(6,334)Loss on early extinguishment of debt326?Deferred income tax3,11314,050Loss on investments and other, net(1,641)(30,861)Change in operating assets and liabilities, net of acquisitions:Accounts receivable(8,393)6,346Prepaid expenses and other current assets1,945(5,990)Accounts payable and accrued expenses(10,904)(1,784)Deferred revenue(7,795)(12,870)Due to/from FAFC975(21,065)Income taxes19,48721,934Dividends received from investments in affiliates19,02012,127Other assets and other liabilities(6,238)(8,026)Net cash provided by operating activities - continuing operations69,72621,520Net cash (used in)/provided by operating activities - discontinued operations(4,694)1,113Total cash provided by operating activities$65,032$22,633Cash flows from investing activities:Purchase of redeemable noncontrolling interests?(72,000)Purchases of capitalized data and other intangible assets(6,959)(6,298)Purchases of property and equipment(13,519)(9,721)Cash paid for acquisitions, net of cash acquired?(27,397)Purchases of investments?(28,749)Proceeds from sale of property and equipment45?Proceeds from sale of investments?53,847Change in restricted cash(186)?Net cash used in investing activities - continuing operations(20,619)(90,318)Net cash provided by/(used in) investing activities - discontinued operations239(1,489)Total cash used in investing activities$(20,380)$(91,807)Cash flows from financing activities:Repayment of long-term debt(52,247)(211,320)Proceeds from issuance of stock related to stock options and employee benefit plans1872,217Share repurchases?(15,082)Distribution to noncontrolling interests(10)(4,290)Tax benefit related to stock options56217Net cash used in financing activities - continuing operations(52,014)(228,258)Net cash provided by financing activities - discontinued operations1?Total cash used in financing activities$(52,013)$(228,258)Net decrease in cash and cash equivalents(7,361)(297,432)Cash and cash equivalents at beginning of period259,266426,212Less: Change in cash and cash equivalents  - discontinued operations(4,454)(376)Cash and cash equivalents at end of period$256,359$129,156Supplemental disclosures of cash flow information:Cash paid for interest$4,776$7,849Cash paid for income taxes$1,099$2,994Cash refunds from income taxes$13,170$5,986Non-cash financing activities:Adjustment of carrying value of mandatorily redeemable noncontrolling interest$?$(3,800)Non-cash investing activities:Note payable issued for the acquisition of investment in affiliate$?$12,700Please 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 EBITDA AND ADJUSTED EBITDAFor the Three Months Ended March 31, 2012(in thousands)Data & AnalyticsMortgage Origination ServicesDefault ServicesCorporateCoreLogicIncome from continuing operations before equity in earnings of affiliates and income taxes$21,825$32,119$10,492$(31,710)$32,726Pretax equity in earnings64414,856?(1)15,499Depreciation & amortization17,4087,4187953,87029,491Total interest expense298298(74)13,62014,142EBITDA40,17554,69111,213(14,221)91,858Stock-based compensation7801,152(18)2,4404,354Efficiency investments???4,0354,035Adjusted EBITDA$40,955$55,843$11,195$(7,746)$100,247For the Three Months Ended March 31, 2011(in thousands)Data & AnalyticsMortgage Origination ServicesDefault ServicesCorporateCoreLogicIncome from continuing operations before equity in earnings of affiliates and income taxes$17,585$43,308$14,174$(25,180)$49,887Pretax equity in earnings1,2139,294(18)68$10,557Depreciation & amortization11,7355,138$1,317$4,847$23,037Total interest expense(662)(837)(17)9,0677,550EBITDA$29,871$56,903$15,456$(11,198)$91,031Stock-based compensation7874991091,7153,110Non-operating investment (gains)/losses?(24,897)488(3,648)(28,057)Efficiency investments???2,9752,975Adjusted EBITDA$30,658$32,505$16,053$(10,156)$69,059CORELOGIC, INC.RECONCILIATION OF ADJUSTED DILUTED EPSFor the Three Months Ended March 31, 2012(in thousands, except per share amounts)Data & AnalyticsMortgage Origination ServicesDefault ServicesCorporateCoreLogicIncome from continuing operations before equity in earnings of affiliates and income taxes$21,825$32,119$10,492$(31,710)$32,726Pretax equity in earnings64414,856?(1)15,499Stock-based compensation7801,152(18)2,4404,354Efficiency investments???4,0354,035Adjusted pretax income from continuing operations$23,249$48,127$10,474$(25,236)$56,614Tax provision (40% rate)22,646Less: Net loss attributable to noncontrolling interests(94)Adjusted net income attributable to CoreLogic$34,062Weighted average diluted common shares outstanding107,327Adjusted diluted EPS$0.32For the Three Months Ended March 31, 2011(in thousands, except per share amounts)Data & AnalyticsMortgage Origination ServicesDefault ServicesCorporateCoreLogicIncome from continuing operations before equity in earnings of affiliates and income taxes17,58543,30814,174(25,180)49,887Pretax equity in earnings1,2139,294(18)6810,557Stock-based compensation7874991091,7153,110Non-operating investment (gains)/losses?(24,897)488(3,648)(28,057)Efficiency investments???2,9752,975Adjusted pretax income from continuing operations$19,585$28,204$14,753$(24,070)$38,472Tax provision (40% rate)15,389Less: Net income attributable to noncontrolling interests817Adjusted net income attributable to CoreLogic$22,266Weighted average diluted common sharesoutstanding116,306Adjusted diluted EPS$0.19   SOURCE CoreLogicFor further information: Media, Alyson Austin, office, +1-714-250-6180, alaustin@corelogic.com, or Investors, Dan Smith, +1-703-610-5410,danlsmith@corelogic.com