CoreLogic Inc. (CLGX) reported first quarter adjusted earnings of 50 cents per share, surpassing the Zacks Consensus Estimate of 44 cents. Results also exceeded the year-ago quarter’s earnings by 16.3%.
The solid performance came on the back of increase in revenue and profit margins. Lower share count due to share repurchases during the second quarter of 2013 also led to an improvement in the bottom line.
CoreLogic reported net income of 46 cents per share, up 17.9% from 39 cents earned in the year-ago quarter.
Quarterly Operational Update
Operating revenues increased 9.7% year over year to $427 million in the second quarter driven by solid contribution from Mortgage Origination Services (MOS) segment and Data & Analytics (D&A) segment revenue. It surpassed the Zacks Consensus Estimate of $412 million.
Total operating expenses in the quarter increased 11.4% year over year to $358.6 million. The increase was largely driven by higher cost of services (up 7.6% year over year) and selling, general and administrative expenses (up 20.3% year over year).
Operating income of CoreLogic during the second quarter of 2013 increased 1.2% year over year to $68.4 million. The increase was driven by higher revenues in the MOS and D&A segment as well as improved operating leverage in the MOS segment.
Adjusted earnings before interest tax, depreciation and amortization (:EBITDA) increased 6% year over year to $132.7 million.
Quarterly Segment Update
The Data & Analytics revenues in the quarter increased 11.2% year over year to $169 million, primarily due to higher demand for property-related information and analytics as well as advisory services related to assisting clients with regulatory compliance.
Adjusted EBITDA of $52.5 million were down 1.2% year over year.
The Mortgage Origination Services revenues in the quarter increased 24.6% year over year to $184.4 million, due to increased market demand for credit reports, tax services and flood certifications, and market-share gains by the tax services business.
Adjusted EBITDA of $73.2 million were up 12.8% year over year due to higher volumes processed and market share gains.
The Asset Management & Processing Services revenues in the quarter decreased 14.5% year over year to $80.1 million, due to a double-digit fall in market volumes of delinquent loans and foreclosure starts, and the impact of exit of unprofitable product lines over the past twelve months.
Adjusted EBITDA of $18.8 million were down 13.1% year over year as lower revenues more than offset the impact of cost reduction programs.
Cost Reduction Programs
Cost reductions related to CoreLogic’s previously announced Project 30 program were approximately $5.8 million in the reported quarter.
CoreLogic repurchased common shares for a total of $75.7 million in the first six months of 2013 and raised its 2013 share repurchase target to 8 million from 5 million.
CoreLogic exited the quarter with cash and cash equivalents of $176.6 million, up 18.6% from $148.9 million at Dec 31, 2012.
Net cash from operations totaled $166.7 million in the first half og 2013, decreasing 13.4% year over year.
Free cash flow generated in the first half of 2013 was $114.4 million.
Long-term debt of CoreLogic declined 1.1% to $783.7 million at Jun 30, 2013 from $792.3 million at year end 2012. Debt to capital ratio deteriorated 30 basis points to 40.7% from 40.4% at year end 2012.
As of Jun 30, 2013, CoreLogic had approximately $500.0 million available in its revolving credit facility.
To strengthen its association with Bank of America Corporation (BAC), CoreLogic entered into a services agreement on Jul 18, 2013. Pursuant to the agreement CoreLogic will continue to provide flood and tax services to the mega bank. For this, it acquired the flood zone determination and tax processing services assets and operating platforms from Bank of America in the first week of Jul 2013.
CoreLogic expects its 2013 revenues to be in the range of $1.575 and $1.6 billion, based on the present revenue and volume trends within the company’s operating units, projected Project 30 cost savings and TTI investments, and seasonality.
Adjusted EBITDA is expected to be between $460 and $475 million.
On account of the enhanced share repurchase program, the previous guidance regarding adjusted EPS of $1.65–$1.75 has been increased to $1.70–$1.80.
CoreLogic currently carries a Zacks Rank #3 (Hold). Among others, Information Services Group Inc. (III) and Garner Inc. (IT) with a favorable Zacks Rank #2 (Buy) are scheduled to report second quarter 2013 results on Aug 6 and Aug 2 respectively.
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