Strong Operating Performance Delivered(PRNewswire) — CoreLogic (NYSE: CLGX), a leading residential property information, analytics and services provider, today reported financial results for the quarter ended September 30, 2013.
"CoreLogic delivered strong operating performance in the third quarter despite the sharp downturn in loan originations tied to refinancing and the continued drop in loan delinquency and foreclosure rates. Our success is the result of a relentless focus on building out our D&A and MOS segments, margin expansion and disciplined capital management," said Anand Nallathambi, President and Chief Executive Officer of CoreLogic. "As we close out 2013, we are continuing to invest in areas of strategic growth and operational excellence which we believe will provide sustainable, long-term value creation for our stakeholders."
"Our strong margin and cash flow profile provides the financial flexibility to execute against our plan despite market headwinds. Consistent with prior quarters, CoreLogic continued to focus on the key pillars of our strategic plan including driving our core growth strategies and our core lines of business, improving cost productivity, and repurchase of our shares," added Frank Martell, Chief Financial Officer of CoreLogic. "The launch of our 2014 cost reduction program as well as the aggressive integration of Bank of America's tax and flood operations (BAC Acquisition) and ultimately the acquisition of MSB and DataQuick should provide significant financial benefits beginning in 2014."
Third Quarter Financial Highlights
Consolidated third quarter revenues totaled $405.5 million, in line with prior-year levels, as gains from increased market share, organic growth and acquisition-related revenues mostly offset the impact of sharply lower mortgage origination volumes and delinquent loan counts. MOS revenues grew 8.8% to $184.3 million as the benefit of market share gains, including the BAC Acquisition, more than offset the impact of lower mortgage market activity. D&A revenues rose 2.9% to $159.3 million driven principally by growth in geospatial solutions, property information revenues in Australia and advisory services which more than offset the impact of lower mortgage loan application volumes, unfavorable currency translation and declines in specialty credit. AMPS revenues of $68.3 million were down 23.5% from prior-year levels reflecting a double-digit drop in market volumes of delinquent loans and foreclosure starts, lower revenues in the field services business and the exit of several unprofitable product lines over the past year.
Operating income from continuing operations totaled $72.0 million for the third quarter of 2013 compared with $61.4 million for the third quarter of 2012. The 17.3% increase in operating income was due principally to revenue gains in MOS and D&A, lower TTI-related costs, and cuts in general and administrative expenses which more than offset the impact of lower AMPS revenues as well as integration costs attributable to the BAC Acquisition. Third quarter 2013 operating income margin was 17.8% compared with 15.0% for the third quarter of 2012. Positive operating margin trends reflect the benefit of a shift in business mix toward higher margin revenues as well as lower costs. Third quarter 2013 cost reductions related to the Company's Project 30 program were approximately $5.0 million. Project 30 cost savings relate primarily to workforce productivity and cuts in spending on real estate and outside services.
Net income from continuing operations totaled $50.0 million, up 38.3% year-on-year. The increase was attributable to operating upsides and certain non-operating gains in the third quarter of 2013 and one-time charges in the prior-year period. Diluted earnings per share (EPS) from continuing operations totaled $0.52 for the third quarter of 2013, up 48.6% from the third quarter of 2012. Adjusted diluted EPS totaled $0.48, which represented a 6.7% increase over the same 2012 period reflecting improvement in the Company's profit margin profile as well as the impact of share repurchases partially offset by integration costs related to the BAC Acquisition.
Adjusted EBITDA totaled $118.4 million in third quarter 2013, in line with prior year levels despite significantly lower market volumes. Third quarter 2013 adjusted EBITDA margin was 29.2%, in line with prior-year levels. MOS adjusted EBITDA decreased 8.8% to $64.7 million compared with prior-year levels driven primarily by lower market volumes and integration costs related to the BAC Acquisition. D&A adjusted EBITDA totaled $48.0 million, a 1.9% decrease from third quarter 2012 as the impact of lower mortgage loan application volumes, declines in specialty credit and unfavorable currency translation were partially offset by higher revenues. Adjusted EBITDA attributable to AMPS was $14.6 million, 17.2% below prior-year levels as cost reduction programs partially offset the impact of lower revenues. Year-over-year, corporate and TTI cost trends were favorable.
Revenue and adjusted EBITDA contributions included in MOS results associated with the BAC Acquisition in the third quarter of 2013 were $12.9 million and negative $2.6 million (including one-time integration costs totaling $7.4 million), respectively.
Liquidity and Capital Resources
At September 30, 2013, the Company had cash and cash equivalents of $135.6 million compared with $148.9 million at December 31, 2012. Year-to-date, the Company repurchased 5 million of its common shares for a total of $133.6 million. Year-to-date free cash flow (FCF) totaled $184.4 million, which represented 50.2% of adjusted EBITDA. Third quarter 2013 FCF totaled $70.0 million, which represented 59.1% of adjusted EBITDA. 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.
Total debt as of September 30, 2013 was $789.4 million, down $3.1 million from December 31, 2012. As of September 30, 2013, the Company had available capacity on its revolving credit facility of $500.0 million.
During the third quarter, the Company purchased assets and platforms related to BAC's flood zone determination and tax processing services operations for $62.5 million in cash. The Company also announced the pending acquisition of MSB and DataQuick for $661.0 million which is subject to customary closing conditions including regulatory clearance. In connection with this transaction, on September 18, 2013, the Company entered into a credit agreement (CA) to refinance its existing term loan debt upon the closing of the acquisition. For information on the material terms of the CA, refer to the Company's Form 8-K filed on September 18, 2013.
2013 Financial Guidance
The Company expects to generate revenues between $1.575 and $1.6 billion, adjusted EBITDA of $460 - $475 million and adjusted EPS of $1.70 - $1.80 based on current markets trends. These ranges are consistent with the guidance provided in conjunction with the Company's second quarter earnings release and exclude the impact of the BAC Acquisition and the pending acquisition of MSB and DataQuick.