CoreLogic Reports Fourth Quarter and Full-Year 2018 Financial Results

Company Expands Insurance and International Footprint and
Outperforms U.S. Mortgage Market Trends; Margin Expansion and Free Cash
Flow Generation Highlight Strong Operating Execution

IRVINE, Calif.–(BUSINESS WIRE)–CoreLogic (NYSE: CLGX), a leading global provider of residential
property information, insight, analytics and data-enabled solutions,
today reported financial results for the quarter and year ended December
31, 2018.


Full-Year Highlights

  • Revenues of $1,788 million, down 3% as organic growth and benefits of
    acquisitions partially offset an estimated 15% drop in U.S. mortgage
    origination unit volumes and lower appraisal management company
    (“AMC”) revenues.
  • Operating income from continuing operations of $223 million, down 7%
    as cost productivity benefits and favorable revenue mix partially
    offset U.S. mortgage market headwinds, increased investment spending
    and a 2018 $8 million non-cash impairment charge related to the
    planned exit of certain non-core software units.
  • Net income from continuing operations of $122 million, down 18% ,
    reflecting a one-time benefit of $38 million in the 2017 tax
    provision, attributable to the U.S. Tax Cuts and Jobs Act.
  • Diluted EPS from continuing operations of $1.49, down 15%. Adjusted
    EPS of $2.72, up 15%.
  • Adjusted EBITDA of $493 million, up 3%; adjusted EBITDA margin of 28%.
  • Repurchased 2.3 million shares, or 3% of outstanding shares, for $109
    million.

Fourth Quarter Highlights

  • Revenues of $403 million, down 11%, primarily driven by an estimated
    25% drop in U.S. mortgage volumes and lower AMC revenues.
  • Operating income from continuing operations of $29 million, down 56%,
    on lower mortgage market volumes, elevated investment spending, and
    the above described 2018 non-cash impairment charge.
  • Net income from continuing operations of $13 million, down from $65
    million reflecting the effects of U.S. mortgage market headwinds, the
    2017 tax benefit and the 2018 non-cash impairment charge.
  • Adjusted EBITDA of $103 million, compared to $117 million in 2017.

CoreLogic continued to successfully execute against its long-term
strategic plan in 2018 despite significant U.S. mortgage market
headwinds. We also reduced our costs significantly and drove
productivity. In addition, we continued to scale our core operations,
expanded our international and insurance business, accelerated the
transformation of our AMC and initiated the exit of certain non-core
legacy units,” said Frank Martell, President and Chief Executive Officer
of CoreLogic. “Throughout 2018, we reinvested in our business with a
focus on building our core capabilities in data and technology, which we
expect will be a foundation for future growth and margin expansion,”
Martell added.

Fourth Quarter Financial Summary

Fourth quarter reported revenues totaled $403 million compared with $454
million in the same 2017 period. During the quarter, U.S. mortgage
market volumes declined by an estimated 25% on lower refinancing
activity and home sales. Property Intelligence & Risk Management
Solutions (“PIRM”) revenues fell 7% from 2017 levels to $168
million, due mainly to lower contributions from weather-related natural
hazard solutions, the impact of lower U.S. mortgage loan volumes and
unfavorable foreign currency translation. Underwriting & Workflow
Solutions (“UWS”) revenues totaled $239 million, down 14% from 2017
levels, as benefits from market outperformance and higher collateral
valuation platform revenues partially offset mortgage market unit
declines and lower AMC volumes.

Operating income from continuing operations totaled $29 million for the
fourth quarter compared with $65 million in 2017. Lower operating income
was principally attributable to the impact of a 25% decline in
origination unit volumes, lower weather-related natural hazard revenues,
higher investment spend, and the 2018 non-cash impairment charge
discussed previously.

Fourth quarter net income from continuing operations totaled $13
million, a decline of $52 million when compared to 2017. The decline was
primarily driven by U.S. mortgage market headwinds, the above described
2017 tax benefit and the 2018 non-cash impairment charge. Diluted EPS
from continuing operations totaled $0.16 for the fourth quarter of 2018
compared with $0.78 in 2017. Adjusted EPS totaled $0.48 compared with
$0.55 in the fourth quarter of 2017.

Adjusted EBITDA totaled $103 million in the fourth quarter compared with
$117 million in the same prior year period. The year-over-year reduction
in adjusted EBITDA resulted principally from lower revenues and higher
levels of investment on data and technology capabilities, partially
offset by cost management benefits. PIRM segment adjusted EBITDA totaled
$41 million compared to $50 million in 2017. UWS adjusted EBITDA was $71
million, in-line with the prior year total of $72 million.

Liquidity and Capital Resources

At December 31, 2018, the Company had cash and cash equivalents of $85
million compared with $119 million at December 31, 2017. Total debt as
of December 31, 2018 was $1,797 million compared with $1,777 million as
of December 31, 2017. As of December 31, 2018, the Company had available
capacity on its revolving credit facility of $522 million. During 2018,
the Company made $90 million in voluntary principal payments against its
outstanding term loan obligations.

Net operating cash provided by continuing operations for the year ended
December 31, 2018 was $355 million. Free cash flow (“FCF”) for the year
ended December 31, 2018 totaled $258 million, which represented 52% of
adjusted EBITDA.

In 2018, the Company repurchased 2.3 million of its common shares for
$109 million. In line with its strategy of growing its platform,
insurance and international revenues, during the fourth quarter of 2018
the Company purchased HomeVisit and the remaining interest in Symbility.

2019 Full Year Financial Guidance and
Assumptions

2019 guidance ranges for revenues, adjusted EBITDA and adjusted EPS are
as follows:

  • Revenue of $1.620 to $1.680 billion,
  • Adjusted EBITDA of $450 to $480 million, and
  • Adjusted EPS of $2.25 to $2.55.

The Company’s 2019 guidance ranges are based on the following key
estimates and assumptions:

  • U.S. mortgage loan origination unit volumes expected to decline
    approximately 5% from 2018 levels,
  • Realized savings totaling $20 million from ongoing cost management and
    productivity programs,
  • Foreign currency translation is expected to reduce reported revenues
    and adjusted EBITDA by approximately $10 million and $4 million,
    respectively,
  • 2019 tax planning rate of 25%, and
  • Repurchase of approximately 2-3% of outstanding common shares.

The Company’s previously announced acceleration of its AMC
transformation program and the wind-down of certain non-core software
units are expected to reduce UWS and total revenues $70 to $100 million
during 2019. The corresponding reduction of 2019 adjusted EBITDA is
expected to range from $10 million to $15 million. We may incur
additional cash and non-cash charges as these programs are actioned.

In connection with the Company’s previously announced adjusted EBITDA
margin enhancement program (designed to reach a 30% target level in
2020), we intend to incur discrete charges of approximately $15 million
over the course of 2019. These investments will increase the operating
efficiency and accelerate the transformation of certain technology and
data platforms. Consistent with past practice, these charges will be
reflected in the company’s GAAP financial results and will be excluded
from adjusted EBITDA and adjusted EPS metrics which are non-GAAP
measures.

Our full year 2018 financial results included the benefit from
accelerated revenue recognition of approximately $23 million resulting
from the amendment of a long-term contract which is not expected to
repeat in 2019.

Teleconference/Webcast

CoreLogic management will host a live webcast and conference call on
Wednesday, February 27, 2019, 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:
1-888-220-8451 for U.S./Canada callers or 1-786-789-4776 for
international callers using confirmation code 1070297.

A replay of the webcast will be available on the CoreLogic investor
website for 10 days and also through the conference call number
1-888-203-1112 for U.S./Canada participants or 1-719-457-0820 for
international participants using Conference ID 1070297.

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 those statements related to key estimates and
assumptions related to 2019 guidance, savings expectations from cost
management and productivity programs, results of investments in R&D, as
well as data and technology platforms, results of a planned acceleration
of the AMC transformation program, and results of a planned wind down of
certain non-core software units. 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: a cyber-based attack, data corruption or
network security breach, or inability to secure the electronic
transmission of sensitive data could have a material adverse effect on
our business and reputation; we rely on the ability to access data from
external sources at reasonable terms and prices; systems interruptions
may impair the delivery of our products and services; we are subject to
significant governmental regulations; our revenue is affected by the
strength of the economy, interest rate environment and the housing
market generally; we rely on our top ten clients for a significant
portion of our revenue; and we operate in a competitive business
environment that is impacted by technology advancements or new product
development; our reliance on outsourcing arrangements subjects us to
risk and may disrupt or adversely affect our operations; our acquisition
and integration of businesses may involve increased expenses and may not
produce the desired financial or operating results. 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 is not able to provide a
reconciliation without unreasonable efforts of its forward-looking
guidance related to adjusted EBITDA, adjusted EPS or FCF to the most
directly comparable GAAP financial measure due to the unknown effect,
timing and potential significance of special charges or gains that are
material to the comparable GAAP financial measure.

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 25% and 26% for 2019 and 2018, 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.

(Additional Financial Data Follow)

CLGX-F

CORELOGIC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
           
For the Three Months Ended For the Year Ended
December 31, December 31,
(in thousands, except per share amounts) 2018       2017 2018       2017
Operating revenue $ 403,309 $ 454,157 $ 1,788,378 $ 1,851,117
Cost of services (exclusive of depreciation and amortization) 212,275 229,537 921,429 974,851
Selling, general and administrative expenses 104,565 113,117 444,614 459,842
Depreciation and amortization 57,687   46,137   199,717   177,806  
Total operating expenses 374,527   388,791   1,565,760   1,612,499  
Operating income 28,782   65,366   222,618   238,618  
Interest expense:
Interest income 524 209 1,577 1,532
Interest expense 19,490   18,004   75,551   63,356  
Total interest expense, net (18,966 ) (17,795 ) (73,974 ) (61,824 )
Loss on early extinguishment of debt (1,775 )
Impairment loss on investment in affiliates (3,412 ) (3,811 )
Gain/(loss) on investments and other, net 12,881   2,023   18,005   (2,316 )
Income from continuing operations before equity in (losses)/earnings
of affiliates and income taxes
22,697 46,182 166,649 168,892
Provision/(benefit) for income taxes 8,259   (18,588 ) 45,691   18,172  
Income from continuing operations before equity in (losses)/earnings
of affiliates
14,438 64,770 120,958 150,720
Equity in (losses)/earnings of affiliates, net of tax (1,416 ) 46   1,493   (1,186 )
Net income from continuing operations 13,022 64,816 122,451 149,534
(Loss)/income from discontinued operations, net of tax (412 ) (106 ) (587 ) 2,315
Gain from sale of discontinued operations, net of tax       313  
Net income $ 12,610   $ 64,710   $ 121,864   $ 152,162  
Basic income/(loss) per share:
Net income from continuing operations $ 0.16 $ 0.79 $ 1.51 $ 1.79
(Loss)/income from discontinued operations, net of tax (0.01 ) (0.01 ) 0.03
Gain from sale of discontinued operations, net of tax        
Net income $ 0.15   $ 0.79   $ 1.50   $ 1.82  
Diluted income/(loss) per share:
Net income from continuing operations $ 0.16 $ 0.78 $ 1.49 $ 1.75
(Loss)/income from discontinued operations, net of tax (0.01 ) (0.01 ) 0.03
Gain from sale of discontinued operations, net of tax        
Net income $ 0.15   $ 0.78   $ 1.48   $ 1.78  
Weighted-average common shares outstanding:
Basic 80,198 81,656 80,854 83,499
Diluted 81,330 83,539 82,275 85,234
 

Please refer to the full Form 10-K filing for the complete financial
statements and related notes that are an integral part of the financial
statements.

CORELOGIC, INC.
CONSOLIDATED BALANCE SHEETS
UNAUDITED
           
(in thousands, except par value) December 31, December 31,
Assets 2018 2017
Current assets:
Cash and cash equivalents $ 85,271 $ 118,804
Accounts receivable (less allowances of $5,742 and $8,229 in 2018
and 2017, respectively)
242,814 256,595
Prepaid expenses and other current assets 50,136 47,220
Income tax receivable 25,299   7,649  
Total current assets 403,520 430,268
Property and equipment, net 456,497 447,659
Goodwill, net 2,391,954 2,250,599
Other intangible assets, net 468,405 475,613
Capitalized data and database costs, net 324,049 329,403
Investment in affiliates, net 22,429 38,989
Other assets 102,136   104,882  
Total assets $ 4,168,990   $ 4,077,413  
Liabilities and Equity
Current liabilities:
Accounts payable and other accrued expenses $ 166,258 $ 145,655
Accrued salaries and benefits 84,940 93,717
Contract liabilities, current 308,959 303,948
Current portion of long-term debt 26,935   70,046  
Total current liabilities 587,092 613,366
Long-term debt, net of current 1,752,241 1,683,524
Contract liabilities, net of current 524,069 504,900
Deferred income tax liabilities 124,968 102,571
Other liabilities 180,122   165,176  
Total liabilities 3,168,492 3,069,537
 
Equity:
CoreLogic, Inc.’s (“CoreLogic”) 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; 80,092
and 80,885 shares issued and outstanding as of December 31, 2018 and
2017, respectively
1 1
Additional paid-in capital 160,870 224,455
Retained earnings 975,375 877,111
Accumulated other comprehensive loss (135,748 ) (93,691 )
Total CoreLogic stockholders’ equity 1,000,498   1,007,876  
Total liabilities and equity $ 4,168,990   $ 4,077,413  
 

Please refer to the full Form 10-K filing for the complete financial
statements and related notes that are an integral part of the financial
statements.

CORELOGIC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
     
For the Year Ended
December 31,
(in thousands) 2018       2017
Cash flows from operating activities:
Net income $ 121,864 $ 152,162
Less: (Loss)/income from discontinued operations, net of tax (587 ) 2,315
Less: Gain/(loss) from sale of discontinued operations, net of tax   313  
Net income from continuing operations 122,451 149,534
Adjustments to reconcile net income from continuing operations to
net cash provided by operating activities:
Depreciation and amortization 199,717 177,806
Amortization of debt issuance costs 5,434 5,650
Provision for bad debts and claim losses 13,467 16,725
Share-based compensation 37,196 35,867
Equity in (earnings)/losses of investee, net of taxes (1,493 ) 1,186
Gain on sale of property and equipment (32 ) (246 )
Loss on early extinguishment of debt 1,775
Deferred income tax 26,940 (40,769 )
Impairment loss on investment in affiliates 3,811
(Gain)/loss on investments and other, net (18,005 ) 2,316
Change in operating assets and liabilities, net of acquisitions:
Accounts receivable 21,093 15,522
Prepaid expenses and other assets (1,158 ) 4,942
Accounts payable and other accrued expenses (17,957 ) (44,629 )
Contract liabilities (15,983 ) 36,577
Income taxes (1,142 ) (43 )
Dividends received from investments in affiliates 775 1,198
Other assets and other liabilities (16,185 ) 14,987  
Net cash provided by operating activities – continuing operations 355,118   382,209  
Net cash (used in)/provided by operating activities – discontinued
operations
(5 ) 3,655  
Total cash provided by operating activities $ 355,113   $ 385,864  
Cash flows from investing activities:
Purchases of property and equipment $ (62,304 ) $ (40,508 )
Purchases of capitalized data and other intangible assets (35,075 ) (34,990 )
Cash paid for acquisitions, net of cash acquired (219,588 ) (188,854 )
Cash received from sale of business-line 3,178
Purchases of investments (5,900 )
Proceeds from sale of property and equipment 207 335
Proceeds from sale of investments and other 4,716   1,000  
Net cash used in investing activities – continuing operations (308,866 ) (268,917 )
Net cash provided by investing activities – discontinued operations    
Total cash used in investing activities $ (308,866 ) $ (268,917 )
Cash flows from financing activities:
Proceeds from long-term debt $ 191,291 $ 1,995,000
Debt issuance costs (14,294 )
Repayments of long-term debt (173,236 ) (1,842,290 )
Shares repurchased and retired (109,063 ) (207,416 )
Proceeds from issuance of shares in connection with share-based
compensation
21,140 9,595
Minimum tax withholdings related to net share settlements (12,858 ) (14,043 )
Net cash used in financing activities – continuing operations (82,726 ) (73,448 )
Net cash provided by financing activities – discontinued operations    
Total cash used in financing activities $ (82,726 ) $ (73,448 )
Effect of exchange rate on cash, cash equivalents and restricted cash 2,575   (1,325 )
Net change in cash, cash equivalents and restricted cash $ (33,904 ) $ 42,174
Cash, cash equivalents and restricted cash at beginning of year 132,154 89,980
Less: Change in cash, cash equivalents and restricted cash –
discontinued operations
(5 ) 3,655
Plus: Cash swept (to)/from discontinued operations (5 ) 3,655  
Cash, cash equivalents and restricted cash at end of year $ 98,250   $ 132,154  
 

Please refer to the full Form 10-K 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 December 31, 2018
(in thousands) PIRM       UWS       Corporate       Elim       CoreLogic
Net income/(loss) from continuing operations $ 25,517       $ 43,181       $ (55,676 )       $       $ 13,022
Income taxes 7,786 7,786
Depreciation and amortization 25,920 17,614 6,514 50,048
Interest expense, net 85 78 18,803 18,966
Share-based compensation 996 1,597 5,029 7,622
Impairment loss 7,639 7,639
Non-operating gains (13,335 ) (3,188 ) (16,523 )
Efficiency investments 187 1,058 7,911 9,156
Transaction costs 1,675 2,928 4,603
Amortization of acquired intangibles included in equity in losses of
affiliates
210                                 210  
Adjusted EBITDA $ 41,255         $ 71,167         $ (9,893 )       $         $ 102,529  
 
      For the Three Months Ended December 31, 2017
(in thousands) PIRM       UWS       Corporate       Elim       CoreLogic
Net income/(loss) from continuing operations $ 28,025       $ 54,752       $ (17,961 )       $       $ 64,816
Income taxes (18,558 ) (18,558 )
Depreciation and amortization 25,077 15,374 5,686 46,137
Interest expense, net 323 104 17,368 17,795
Share-based compensation 1,428 543 4,338 6,309
Non-operating (gains)/losses (4,839 ) 548 2,272 (2,019 )
Efficiency investments 10 10
Transaction costs 779 1,287 2,066
Amortization of acquired intangibles included in equity in losses of
affiliates
156                                 156  
Adjusted EBITDA $ 50,170         $ 72,100         $ (5,558 )       $         $ 116,712  
 
      For the Year Ended December 31, 2018
(in thousands) PIRM       UWS       Corporate       Elim       CoreLogic
Net income/(loss) from continuing operations $ 102,725       $ 238,424       $ (218,698 )       $       $ 122,451
Income taxes 46,187 46,187
Depreciation and amortization 103,343 65,381 23,272 191,996
Interest expense, net 735 305 72,934 73,974
Share-based compensation 5,421 7,885 23,890 37,196
Impairment loss 7,721 7,721
Non-operating gains (17,220 ) (2,483 ) (19,703 )
Efficiency investments 2,143 1,058 17,802 21,003
Transaction costs 6,559 4,792 11,351
Amortization of acquired intangibles included in equity in earnings
of affiliates
909                                 909  
Adjusted EBITDA $ 204,615         $ 320,774         $ (32,304 )       $         $ 493,085  
 

Contacts

Media Contact: Alyson Austin, office phone: 949-214-1414, e-mail: alaustin@corelogic.com
Investor
Contact: Dan Smith, office phone: 703-610-5410, e-mail:
danlsmith@corelogic.com

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