Successful Execution Against Strategic Initiatives, Productivity and Share Repurchase Highlight Strong Financial and Operational Results; 2019 Full-Year Guidance Increased
IRVINE, Calif. — (BUSINESS WIRE) — July 24, 2019 — CoreLogic (NYSE: CLGX), a leading global provider of residential property information, insight, analytics and data-enabled solutions, today reported financial results for the quarter ended June 30, 2019. Operating and financial highlights appear below.
- Revenues of $460 million, down $29 million, or 6%, largely reflecting the impact of a discrete revenue recognition benefit of $23 million in the prior year, and the wind-down of non-core mortgage and default technology units which decreased current period revenue $5 million.
- Operating income of $15 million was down $75 million, or 84%, primarily reflecting the impact of lower revenues, non-cash impairment charges of $48 million, and severance charges of $6 million in connection with the transformation of the Company’s appraisal management company ("AMC").
- Net loss from continuing operations totaled $6 million compared with net income of $59 million, reflecting lower operating income levels. Diluted EPS from continuing operations totaled $(0.07). Adjusted EPS totaled $0.82.
- Adjusted EBITDA of $134 million, down $25 million, or 16%. The decrease is primarily due to the prior year revenue recognition benefit and the wind-down of non-core operations. Adjusted EBITDA margin was 29%.
- Credit facility amended to extend tenor, increase borrowing capacity, and enhance certain terms.
- Repurchased 700,000 shares or 1% of outstanding share count.
- Full-year 2019 financial guidance increased.
“CoreLogic delivered a strong operating performance over the first six months of 2019 despite challenging market conditions in the U.S. and Australia. On a run-rate basis, after considering discrete items, revenues and profitability were essentially in line with a strong prior year comparative. We grew our insurance and international capabilities and footprint as well as expanded our real estate and valuation platform revenues. Our UWS segment had a strong first half and is well positioned for further revenue and margin growth," said Frank Martell, President and Chief Executive Officer of CoreLogic. “As market leaders, we are continuing to reinvest in our business with a focus on building upon our core capabilities in data and technology, as well as reducing run-rate costs and driving productivity gains, which we expect will be a foundation for our continued success.”
Second Quarter Financial Summary
Second quarter reported revenues totaled $460 million, down $29 million or 6%, from 2018. The year-over-year decline in revenue was driven principally by the above-referenced revenue recognition benefit of $23 million in the prior year which had no 2019 counterpart, the wind-down of non-core mortgage and default technology units which decreased revenue by $5 million, and unfavorable currency translation of $3 million. Property Intelligence & Risk Management Solutions ("PIRM") revenues rose 1% from 2018 levels to $184 million as growth in the insurance vertical and real estate solutions offset lower market volumes in Australia and currency translation. Underwriting & Workflow Solutions ("UWS") revenues totaled $279 million, down 10% from 2018. The decline in UWS revenue primarily reflects the benefit of second quarter 2018 accelerated revenue recognition resulting from the amendment of a long-term contract, lower credit services volumes, and the impact of the wind-down of non-core mortgage and default technology units.
Operating income from continuing operations totaled $15 million compared with $90 million in 2018. Lower operating income was principally driven by non-cash impairment charges of $48 million and severance of $6 million incurred in connection with the Company’s AMC transformation, the impact of the wind-down of non-core operations, and the 2018 revenue recognition benefit discussed above. Increased investment in core platforms and productivity programs as well as product, service, and information security capabilities was mitigated by productivity benefits.
Second quarter net loss from continuing operations totaled $6 million, compared with net income of $59 million, reflecting lower operating income levels discussed previously. Diluted EPS from continuing operations totaled $(0.07). Adjusted EPS totaled $0.82.
Adjusted EBITDA totaled $134 million in the second quarter compared with $159 million in the same prior year period. The year-over-year decrease in adjusted EBITDA of $25 million or 16%, resulted primarily from the discrete revenue recognition benefit of $23 million in 2018 and the impact of the wind-down of non-core mortgage and default technology units. Adjusted EBITDA margin was 29%. PIRM segment adjusted EBITDA totaled $53 million compared to $60 million in 2018 reflecting higher levels of investments in core platforms and technology as well as the impact of lower market volumes in Australia and currency translation. UWS adjusted EBITDA was $89 million, compared to $104 million for the prior year quarter. Excluding the impacts of the previously-discussed 2018 discrete revenue recognition item and the wind-down of non-core mortgage and default technology units, second quarter 2019 UWS adjusted EBITDA increased by approximately $10 million from the prior year, reflecting favorable revenue mix and productivity gains.
Liquidity and Capital Resources
In May 2019, the Company completed an amendment of its senior secured credit facility which increased borrowing capacity by more than $200 million, and extended tenor to May 2024. Following closing, the Company’s amended senior secured credit facility consisted of $1,750 million in outstanding term loans and a $750 million revolving credit facility.
At June 30, 2019, the Company had cash and cash equivalents of $82 million compared with $85 million at December 31, 2018. Total debt as of June 30, 2019 was $1,781 million compared with $1,797 million as of December 31, 2018. At June 30, 2019, the Company had available capacity on its revolving credit facility of $740 million.
Net operating cash provided by continuing operations for the twelve months ended June 30, 2019 was $327 million. Free cash flow ("FCF") for the twelve months ended June 30, 2019 totaled $207 million, which represented 45% of adjusted EBITDA.
During the second quarter of 2019, the Company completed the repurchase of 700,000 common shares, or 1% of outstanding share count, for $29 million.
Updated Financial Guidance and Assumptions
As noted above, the Company has increased its 2019 full-year guidance:
($ in millions except adjusted EPS)
July 24, 2019
$1,700 - $1,740
$460 - $490
$2.45 - $2.70
(1) Definition of adjusted EBITDA and adjusted EPS, 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 updated 2019 guidance ranges provided above reflect the following updated estimates and assumptions:
- We expect U.S. mortgage loan origination unit volumes to be flat to modestly above 2018 levels.
- Foreign currency translation is expected to reduce reported revenues and adjusted EBITDA by approximately $15 million and $6 million, respectively.