Corelogic Reports Fourth Quarter and Full-Year 2018 Financial Results

IRVINE, California, Feb. 26 -- CoreLogic, a property, mortgage and consumer information provider, issued the following news release:

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

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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:

* 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. Thecorresponding 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.