Buddy Piszel, Chief Financial Officer, commented on the quarter: "Our third quarter 2010 results demonstrate the earnings power and resiliency of our current business mix. As expected, the majority of our businesses performed very well, with flood, geospatial and tax servicing volumes showing good follow-through from the second quarter and risk and fraud analytics products continuing to gain customer adoption. While the outlook for mortgage originations in 2011 suggests some softening in refinancing volumes, targeted cost savings and our announced share repurchase program should help us defend EBITDA margins and per share results from our continuing businesses."
BUSINESS AND INFORMATION SERVICES
Adjusted EBITDA was $62.2 million, up 6.1% compared with the prior quarter, driven by significant growth in adjusted revenues and lower operating expenses in the mortgage origination services group.
Adjusted revenues from the mortgage origination services group increased by 5.6% to $137.7 million, as continued growth in flood and geospatial services and improved results from the company's national joint ventures more than offset adjusted revenue declines in the appraisal and tax servicing businesses. During the third quarter, adjusted revenues from the flood and geospatial
solutions businesses increased due to the continued high level of mortgage loan refinancing volumes, the closing of several large geospatial solutions contracts and increased activity in federal projects. Adjusted revenues from the national joint ventures also increased due to higher loan application and origination volumes. Adjusted revenues in the default and technology services group declined by 1.5% to $110.2 million, due to a lower volume of broker price opinions and default technology services compared to the previous quarter.
Adjusted EBITDA margin was 25%, up from 24% in the prior quarter. Margin growth in the third quarter reflected higher revenues, continued cost containment efforts, and improved business mix that was more heavily weighted towards relatively high margin flood, geospatial and national joint venture businesses.
DATA AND ANALYTICS
Adjusted EBITDA was $56.1 million, up 14.5% compared with the prior quarter, driven by higher adjusted revenues from fraud and income verification products in the risk and fraud group and significant growth in adjusted revenues associated with mortgage loan credit reports in the specialty finance group.
Adjusted revenue was $187.5 million, compared with $179.8 million in the prior quarter. Risk and fraud analytics adjusted revenues increased by 1.3% to $103.5 million, as continued high level of mortgage loan applications and originations increased demand for the company's fraud and income verification services. Specialty finance adjusted revenues increased by 8.1% to $84.0 million, led by higher mortgage-related credit report volumes.
Adjusted EBITDA margin was 30%, up from 27% in the prior quarter. Adjusted EBITDA margin in the risk and fraud analytics group increased to 34% from 32% reflecting improved product mix, resulting from an increased proportion of relatively high-margin fraud and income verification products. Adjusted EBITDA margin in the specialty finance group improved to 25% from 21% in the prior quarter, reflecting significant growth in mortgage-related credit report volumes.
EMPLOYER, LEGAL AND MARKETING SERVICES
Adjusted EBITDA was $10.7 million, up 55.1% compared with the prior quarter. Improvements were driven by higher adjusted revenues in the employer and litigation services businesses.
Adjusted revenue was $77.8 million, compared with $66.0 million in the prior quarter. Employer services revenues increased by 10.1% to $54.6 million, driven by continued growth in international employment
screening activity. Litigation and investigation support adjusted revenues increased compared to the prior quarter, reflecting an improvement in adjusted revenues tied to increased legal services for new clients.
Adjusted EBITDA margin was 14%, up from 10% in the prior quarter. Significantly, all of this improvement resulted from improved adjusted revenues in the employer and litigation services businesses.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2010, CoreLogic had cash on balance sheet of $327.3 million, and total debt outstanding of $530.9 million. During the quarter, CoreLogic paid down $85 million on its credit line, leaving the full $500 million available under the company's credit facility at quarter end.
The CoreLogic management team will host a live webcast and conference call on Thursday, November 4, 2010, at 2:00 p.m. Pacific time (5:00 p.m. Eastern time) to discuss third quarter 2010 financial results. All interested parties are invited to listen to the live event via webcast on the CoreLogic website at http://investor.corelogic.com. The discussion is also available through dial-in number 1-866-804-6923 for U.S./Canada participants or 857-350-1669 for international participants using Conference ID 84254064.
A replay of the webcast will be available on the CoreLogic investor website for 30 days and also through the conference call number 1-888-286-8010 for U.S./Canada participants or 617-801-6888 for international participants using Conference ID 47397448.
Additional detail on the company's third quarter financial results is included in the quarterly supplement, available on the Investor Relations page at http://investor.corelogic.com.
CoreLogic (NYSE: CLGX) is a leading provider of consumer, financial and property information, analytics and services to business and government. The company combines public, contributory and proprietary data to develop predictive and decision analytics and provide business services that bring dynamic insight and transparency to the markets it serves. CoreLogic has built the largest U.S. real estate, mortgage application, fraud, and loan performance databases and is a leading provider of mortgage and automotive credit reporting, property tax information, valuation, flood determination and geospatial analytics and services. More than one million users rely on CoreLogic to assess risk, support
underwriting, investment and marketing decisions, prevent fraud, and improve business performance in their daily operations. Formerly the information solutions group of The First American Corporation, CoreLogic began trading under the ticker CLGX on the NYSE on June 2, 2010. The company, headquartered in Santa Ana, Calif., has more than 10,000 employees globally with 2009 revenues of $2 billion. For more information visit www.corelogic.com.
Web Site Disclosure
CoreLogic posts information of interest to investors at http://investor.corelogic.com.
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 related to the company's outlook, performance and strategy for 2010, the company's intended share repurchases and the impact thereof, the potential sale of the employer, investigative and litigation services businesses and the impact thereof, and the company's intended acquisition strategy. These forward-looking statements may contain the words "believe," "anticipate," "expect," "plan," "predict," "estimate," "project," "will be," "will continue," "will likely result," or other similar words and phrases. Risks and uncertainties exist that may cause 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 are set forth in our Current Report on Form 8-K filed on June 1, 2010 and Part I, Item 1A of our most recent Annual Report on Form 10-K, as updated by our Quarterly Reports on Form 10-Q, including but not limited to:
- limitations on access to data from external sources, including government and public record sources;
- 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;
- compromises in the security of our data transmissions, including the transmission of confidential information or systems interruptions;
- difficult conditions in the mortgage and consumer credit industry, the state of the securitization market, increased unemployment, and conditions in the economy generally;
- our ability to bring new products to market and to protect proprietary technology rights;
- our ability to identify purchasers and complete the sale of certain businesses on satisfactory terms or identify suitable acquisition targets, obtain necessary capital and complete such transactions on satisfactory terms;
- our ability to realize the benefits of our off-shore strategy;
- consolidation among our significant customers and competitors;
- impairments in our goodwill or other intangible assets; and
- the inability to realize the benefits of the spin-off transaction as a result of the factors described immediately above, as well as, among other factors, increased borrowing costs, competition between the resulting companies, increased operating or other expenses or the triggering of rights and obligations by the transaction or any litigation arising out of or related to the separation.