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CoreLogic Reports First Quarter 2020 Financial Results

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Strong Operating Performance Highlighted by Revenue Growth,
Margin Expansion, and Cash Flow Generation

CoreLogic (NYSE: CLGX), a leading global provider of residential property information, analytics, and data-enabled solutions, today reported financial results for the quarter ended March 31, 2020. Operating and financial highlights appear below.

  • Revenues of $444 million, up $26 million or 6%, driven by growth in core mortgage and insurance and spatial. First quarter 2019 revenues included $21 million attributable to non-core default technology units sold and the AMC transformation, which have no 2020 counterpart. Revenues were up 12% excluding these discrete items.

  • Operating income from continuing operations of $67 million, up 216%, reflecting higher revenues and favorable business mix, as well as operating leverage and cost productivity benefits.

  • Net income from continuing operations of $34 million, up $32 million, due to operating income upsides.

  • Diluted EPS from continuing operations of $0.42, up $0.40. Adjusted EPS of $0.76, up $0.31.

  • Adjusted EBITDA of $130 million, up 33%; adjusted EBITDA margin of 29% compared to 23% in the prior year.

"CoreLogic reported an outstanding operating and financial performance in the first quarter. We delivered top line growth driven by acceleration in our core mortgage, insurance and spatial, and other platform-related businesses. Profit margins expanded 6 percentage points as we capitalized on favorable revenue mix, higher market volumes in the U.S., the benefits of operating leverage, and ongoing productivity gains," said Frank Martell, President and Chief Executive Officer of CoreLogic. "During the quarter we secured several major new client wins, and captured market share which we expect to benefit second half revenues.

"During the first quarter, the CoreLogic team effectively executed our business plans and supported our clients as impacts from the COVID-19 pandemic began to emerge. While the Company did realize some revenue impacts mainly in consumer credit related businesses late in the quarter, results from our core mortgage businesses surpassed underlying industry trends. As we navigate the impacts of the pandemic, we continue to focus on the health and welfare of our associates, addressing critical needs within our communities, and delivering on our client commitments," Martell added.

First Quarter Financial Summary

Revenues of $444 million, up $26 million or 6%, driven by growth in core mortgage and insurance and spatial. The Company’s international operations also grew on a constant-currency basis. As noted above, first quarter 2019 revenues included $21 million attributable to non-core default technology units sold and the AMC transformation, which have no 2020 counterpart. Revenues were up 12% excluding these discrete items. During the quarter we secured a number of new client wins, including significant contracts in collateral valuation and property tax solutions which are expected to benefit second half revenues.

Underwriting & Workflow Solutions ("UWS") revenues totaled $276 million, up $31 million, or 13%, driven by higher U.S. mortgage origination volumes and organic growth fueled by market share gains. UWS first quarter 2019 revenues included $21 million attributable to non-core default technology units sold and the AMC transformation, which have no 2020 counterpart. Revenues were up 23%, excluding these discrete items.

Property Intelligence & Risk Management Solutions ("PIRM") revenues totaled $173 million, compared to $176 million in the prior year. Insurance and spatial and constant-currency international revenues were higher, offsetting the impacts of lower tenant screening volumes, the exit of a non-core business line, and currency translation which aggregated approximately $5 million.

Operating income from continuing operations totaled $67 million for the first quarter, up $46 million or 216% compared to same prior year period. Higher operating income was principally attributable to the benefits of revenue growth, operating leverage, improved business mix and cost productivity.

First quarter net income from continuing operations totaled $34 million, compared with $2 million in 2019. Diluted EPS from continuing operations totaled $0.42, an increase of $0.40 over the same prior year period. Adjusted EPS totaled $0.76, compared with $0.45 in 2019, an increase of 69%. The increases were due to the Company's strong operating performance discussed previously.

Adjusted EBITDA totaled $130 million, up 33%, compared to $98 million in the prior year period. Adjusted EBITDA margin was 29%, an increase of approximately 600 basis points. The increase in adjusted EBITDA and margin was principally attributable to revenue growth, improved business mix, and the benefits of ongoing cost productivity programs. UWS adjusted EBITDA was $91 million, compared to $63 million for the prior year quarter, reflecting operating leverage benefits driven by higher revenues, favorable revenue mix, and continued productivity gains. PIRM adjusted EBITDA totaled $49 million, up from $46 million. Higher PIRM adjusted EBITDA and margins were driven by growth in insurance and spatial, international upsides, as well as the benefit of lower costs which offset lower tenant screening volumes and the impacts of currency translation.

Liquidity and Capital Resources

At March 31, 2020, the Company had cash and cash equivalents of $153 million compared with $105 million at December 31, 2019. Total debt as of March 31, 2020 and December 31, 2019 was approximately $1,687 million. As of March 31, 2020, the Company has the entire capacity on its revolving credit facility of $750 million available.

Net operating cash provided by continuing operations for the twelve months ended March 31, 2020 was $437 million. Free cash flow ("FCF") for the twelve months ended March 31, 2020 totaled $315 million, which represented 59% of adjusted EBITDA.

During the quarter, CoreLogic paid a cash dividend of $0.22 per common share ($17 million) in January 2020 and repurchased 50,000 shares.

COVID-19 Response and Impact

During the first quarter, the Company successfully implemented a programmatic response to mitigate the impacts of the unfolding COVID-19 pandemic. Principal measures taken included the repositioning of many of our personnel to a home-based work environment, adoption of social distancing, enhanced monitoring and sanitization of facilities, and augmentation of the Company’s supply chain infrastructure. During March 2020, the Company experienced business volume and revenue related impacts (mainly in consumer credit related businesses) which are estimated at approximately $6 million.

Teleconference/Webcast

CoreLogic management will host a live webcast and conference call on Thursday, April 30, 2020, at 2:30 p.m. Pacific Time (5:30 p.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 1-412-858-4604 for international callers.

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. and Canada participants or 1-412-317-0088 for international participants using Conference ID 10143046.

CLGX-F

About CoreLogic

CoreLogic (NYSE: CLGX), the leading provider of property insights and solutions, promotes a healthy housing market and thriving communities. Through its enhanced property data solutions, services, and technologies, CoreLogic enables real estate professionals, financial institutions, insurance carriers, government agencies, and other housing market participants to help millions of people find, buy, and protect their homes. 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 COVID-19 pandemic and its impacts, the availability of financing under the revolving credit facility, future growth and margin expansion, and continued operational efficiencies. 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 such risk factors may be amended, supplemented, or superseded from time to time by other reports we file with the SEC. These risks and uncertainties include but are not limited to: any potential impact resulting from COVID-19; 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; systems interruptions that may impair the delivery of our products and services; 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; difficult conditions in the mortgage and consumer lending industries and the economy generally; risks related to the outsourcing of services and international operations; our ability to realize the anticipated benefits of certain acquisitions and/or divestitures and the timing thereof; impairments in our goodwill or other intangible assets; and our ability to generate sufficient cash to service our debt. 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, such as adjusted EBITDA, adjusted EPS, and FCF, 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 believes that its presentation of these non-GAAP measures provides useful supplemental information to investors and management regarding the Company's financial condition and results of operations. Adjusted EBITDA is defined as net income from continuing operations adjusted for interest, taxes, depreciation and amortization, share-based compensation, non-operating gains/losses, and other adjustments. Adjusted EPS is defined as diluted income from continuing operations, net of tax per share, adjusted for share-based compensation, amortization of acquisition-related intangibles, non-operating gains/losses, and other adjustments; and assumes an effective tax rate of 26% and 25% for 2020 and 2019, 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 the Company, 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)

2020

2019

Operating revenues

$

443,885

$

417,708

Cost of services (excluding depreciation and amortization shown below)

215,565

219,061

Selling, general and administrative expenses

114,406

128,224

Depreciation and amortization

46,843

49,219

Total operating expenses

376,814

396,504

Operating income

67,071

21,204

Interest expense:

Interest income

414

978

Interest expense

18,193

19,703

Total interest expense, net

(17,779

)

(18,725

)

(Loss)/gain on investments and other, net

(3,047

)

734

Income from continuing operations before equity in earnings/(losses) of affiliates and income taxes

46,245

3,213

Provision for income taxes

12,951

1,058

Income from continuing operations before equity in earnings/(losses) of affiliates

33,294

2,155

Equity in earnings/(losses) of affiliates, net of tax

512

(422

)

Net income from continuing operations

33,806

1,733

Income/(loss) from discontinued operations, net of tax

13

(46

)

Net income

$

33,819

$

1,687

Basic income per share:

Net income from continuing operations

$

0.43

$

0.02

Income/(loss) from discontinued operations, net of tax

Net income

$

0.43

$

0.02

Diluted income per share:

Net income from continuing operations

$

0.42

$

0.02

Income/(loss) from discontinued operations, net of tax

Net income

$

0.42

$

0.02

Weighted-average common shares outstanding:

Basic

79,028

80,179

Diluted

80,525

81,277

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

2020

2019

Current assets:

Cash and cash equivalents

$

152,822

$

105,185

Accounts receivable (less allowance for credit losses of $7,236 and $7,161 as of March 31, 2020 and December 31, 2019, respectively)

285,528

281,392

Prepaid expenses and other current assets

54,453

59,972

Total current assets

492,803

446,549

Property and equipment, net

443,998

451,021

Operating lease assets

61,754

65,825

Goodwill, net

2,381,309

2,396,096

Other intangible assets, net

364,425

378,818

Capitalized data and database costs, net

320,226

327,078

Investment in affiliates, net

11,339

16,666

Other assets

71,753

76,604

Total assets

$

4,147,607

$

4,158,657

Liabilities and Equity

Current liabilities:

Accounts payable and other accrued expenses

$

174,007

$

173,989

Accrued salaries and benefits

66,643

86,598

Contract liabilities, current

341,068

321,647

Current portion of long-term debt

77,724

56,022

Operating lease liabilities, current

17,532

18,058

Total current liabilities

676,974

656,314

Long-term debt, net of current

1,589,507

1,610,538

Contract liabilities, net of current

568,964

563,246

Deferred income tax liabilities

85,008

110,396

Operating lease liabilities, net of current

80,301

85,139

Other liabilities

219,855

181,814

Total liabilities

3,220,609

3,207,447

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; 79,411 and 78,972 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively

1

1

Additional paid-in capital

111,481

111,000

Retained earnings

1,057,692

1,006,992

Accumulated other comprehensive loss

(242,176

)

(166,783

)

Total stockholders' equity

926,998

951,210

Total liabilities and equity

$

4,147,607

$

4,158,657

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)

2020

2019

Cash flows from operating activities:

Net income

$

33,819

$

1,687

Less: Income/(loss) from discontinued operations, net of tax

13

(46

)

Net income from continuing operations

33,806

1,733

Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:

Depreciation and amortization

46,843

49,219

Amortization of debt issuance costs

1,235

1,302

Amortization of operating lease assets

3,656

4,036

Provision for bad debt and claim losses

3,362

3,788

Share-based compensation

8,085

9,892

Equity in (earnings)/losses of affiliates, net of taxes

(512

)

422

Deferred income tax

2,092

4,346

Loss/(gain) on investments and other, net

3,047

(734

)

Change in operating assets and liabilities, net of acquisitions:

Accounts receivable

(4,011

)

(5,489

)

Prepaid expenses and other current assets

3,677

(2,778

)

Accounts payable and other accrued expenses

(8,112

)

(7,665

)

Contract liabilities

24,372

173

Income taxes

4,930

10,966

Dividends received from investments in affiliates

185

Other assets and other liabilities

(9,808

)

(4,630

)

Net cash provided by operating activities - continuing operations

112,847

64,581

Net cash provided by operating activities - discontinued operations

18

Total cash provided by operating activities

$

112,865

$

64,581

Cash flows from investing activities:

Purchases of property and equipment

$

(14,312

)

$

(24,020

)

Purchases of capitalized data and other intangible assets

(9,464

)

(8,947

)

Cash paid for acquisitions, net of cash acquired

(11,760

)

Purchases of investments

(631

)

Cash received from sale of business-lines

1,082

Proceeds from investments and other

651

1,157

Net cash used in investing activities - continuing operations

(35,516

)

(30,728

)

Net cash provided by investing activities - discontinued operations

Total cash used in investing activities

$

(35,516

)

$

(30,728

)

Cash flows from financing activities:

Repayment of long-term debt

$

(723

)

$

(25,563

)

Proceeds from issuance of shares in connection with share-based compensation

2,932

2,758

Payment of tax withholdings related to net share settlements

(8,051

)

(8,551

)

Shares repurchased and retired

(2,431

)

Dividends paid

(17,374

)

Contingent consideration payments subsequent to acquisitions

(600

)

Net cash used in financing activities - continuing operations

(25,647

)

(31,956

)

Net cash provided by financing activities - discontinued operations

Total cash used in financing activities

$

(25,647

)

$

(31,956

)

Effect of exchange rate on cash, cash equivalents, and restricted cash

(4,690

)

(200

)

Net change in cash, cash equivalents, and restricted cash

47,012

1,697

Cash, cash equivalents, and restricted cash at beginning of period

115,702

98,250

Less: Change in cash, cash equivalents, and restricted cash - discontinued operations

18

Plus: Cash swept from discontinued operations

18

Cash, cash equivalents, and restricted cash at end of period

$

162,714

$

99,947

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, 2020

(in thousands)

PIRM

UWS

CORP

ELIM

CoreLogic

Net income/(loss) from continuing operations

$

19,232

$

76,433

$

(61,859

)

$

$

33,806

Income taxes

13,121

13,121

Depreciation and amortization

25,011

13,245

8,587

46,843

Interest expense/(income), net

419

(10

)

17,370

17,779

Share-based compensation

1,573

976

5,536

8,085

Non-operating losses/(gains)

685

(809

)

3,464

3,340

Efficiency investments and other

484

509

3,965

4,958

Transaction costs

1,348

223

903

2,474

Adjusted EBITDA

$

48,752

$

90,567

$

(8,913

)

$

$

130,406

For the Three Months Ended March 31, 2019

(in thousands)

PIRM

UWS

CORP

ELIM

CoreLogic

Net income/(loss) from continuing operations

$

11,387

$

45,435

$

(55,089

)

$

$

1,733

Income taxes

919

919

Depreciation and amortization

26,799

15,775

6,645

49,219

Interest expense, net

247

81

18,397

18,725

Share-based compensation

1,750

1,623

6,519

9,892

Non-operating losses

2,275

269

2,544

Efficiency investments and other

1,667

463

10,989

13,119

Transaction costs

1,698

(12

)

1,686

Adjusted EBITDA

$

45,823

$

63,377

$

(11,363

)

$

$

97,837

CoreLogic, Inc.

Reconciliation of Adjusted EPS

(Unaudited)

For the Three Months Ended March 31,

(Diluted income per share)

2020

2019

Net income from continuing operations

$

0.42

$

0.02

Share-based compensation

0.10

0.12

Non-operating losses

0.04

0.03

Efficiency investments and other

0.06

0.16

Transaction costs

0.03

0.02

Depreciation and amortization of acquired software and intangibles

0.21

0.24

Income tax effect on adjustments

(0.10

)

(0.14

)

Adjusted EPS

$

0.76

$

0.45

CoreLogic, Inc.

Reconciliation to Free Cash Flow

(Unaudited)

(in thousands)

For the Twelve Months

Ended March 31, 2020

Net cash provided by operating activities - continuing operations

$

437,289

Purchases of property and equipment

(81,864

)

Purchases of capitalized data and other intangible assets

(40,536

)

Free cash flow

$

314,889

View source version on businesswire.com: https://www.businesswire.com/news/home/20200430005970/en/

Contacts

Investor Contact: Dan Smith, office phone: 703-610-5410, e-mail: danlsmith@corelogic.com

Media Contact: Allyse Sanchez, INK Communications for CoreLogic, office phone: 925-548-2535, e-mail: newsmedia@corelogic.com