Market Overview

CoreLogic Reports Second Quarter 2018 Financial Results

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Revenue Growth and Margin Expansion Highlight Strong Operating
Performance; 2018 Full-Year Financial Guidance Enhanced

CoreLogic (NYSE:CLGX), a leading global provider of property
information, insight, analytics and data-enabled solutions, today
reported financial results for the quarter ended June 30, 2018.
Operating and financial highlights for the second quarter appear below.

This press release features multimedia. View the full release here:
https://www.businesswire.com/news/home/20180725005820/en/

CoreLogic President & CEO Frank Martell (Photo: Business Wire)

CoreLogic President & CEO Frank Martell (Photo: Business Wire)

  • Revenues of $488 million were up 3% reflecting growth in the Property
    Intelligence & Risk Management (PIRM) segment and market
    outperformance in the Underwriting & Workflow Solutions (UWS) segment
    and favorable revenue recognition timing associated with the amendment
    of a long-term contract, which more than offset the impact of lower
    U.S. mortgage origination volumes.
  • Operating income rose 14% to $90 million attributable to the benefits
    of cost management and productivity programs, revenue growth including
    favorable revenue recognition timing and business mix.
  • Net income from continuing operations increased $17 million, or 42%,
    to $59 million.
  • Diluted EPS from continuing operations rose 48% to $0.71. Adjusted
    diluted EPS totaled $1.00, up 39%.
  • Adjusted EBITDA rose 18% to $159 million. Adjusted EBITDA margin was
    up 410 basis points to 33%.
  • A total of 872,000 common shares were repurchased in the second
    quarter.
  • The Company enhanced its full-year 2018 financial guidance for
    adjusted EBITDA and adjusted EPS.

"CoreLogic delivered a very strong set of operating and financial
results in the second quarter and first half of 2018. We grew the top
line, expanded operating income and adjusted EBITDA margins and
generated strong free cash flow despite lower U.S. mortgage activity. I
believe this is a clear and important demonstration of the durability
and resiliency of our business model as well as the progress we are
making toward achieving our longer-term profitability targets," said
Frank Martell, President and Chief Executive Officer of CoreLogic.

"We head into the balance of 2018 and beyond, excited by the
opportunities inherent in our strategic plan which is focused on
delivering unique, must-have insights that power and connect the global
housing ecosystem. We remain focused on employing our market leadership
to secure opportunities presented by the evolving purchase-driven
mortgage cycle in the U.S. In addition, our insurance & spatial
solutions and international businesses provide us with opportunities for
high margin non-cyclical growth," Martell added.

Second Quarter Financial Summary

Second quarter revenues totaled $488 million compared with $474 million
in the same 2017 period, an increase of 3%. PIRM revenues rose 4%
to $183 million driven primarily by organic growth in property insights,
including real estate-related and international operations, as well as
contributions from insurance & spatial solutions acquisitions completed
in 2017. UWS segment revenues were up 3% to $308 million despite a more
than 10% decline in U.S. mortgage loan unit volumes and the impact of
the wind down of certain non-core product lines. The positive
year-over-year growth trend resulted principally from organic growth and
the benefit of accelerated revenue recognition (approximately $23
million) resulting from the amendment of a long-term contract. UWS
revenue growth also benefited from the scaling of CoreLogic's valuations
solutions platform through the acquisitions of Mercury Network and a la
mode technologies (ALM).

Operating income totaled $90 million for the second quarter compared
with $78 million for the second quarter of 2017. The 14% year-over-year
increase in operating income was principally attributable to revenue
growth upsides discussed previously, favorable business mix and gains
from cost management and productivity programs. Second quarter operating
income margin was up approximately 180 basis points to 18%.

Second quarter net income from continuing operations totaled $59 million
compared with $41 million in the same 2017 period. The increase was
primarily attributable to operating upsides outlined previously. Second
quarter diluted EPS from continuing operations totaled $0.71 compared
with $0.48 in 2017. Adjusted diluted EPS totaled $1.00, up from $0.72 in
the second quarter of 2017.

Adjusted EBITDA aggregated $159 million in the second quarter compared
with $135 million in the prior year period. The 18% increase in adjusted
EBITDA was principally attributable to revenue growth, improved business
mix and cost productivity partially offset by the impact of lower U.S.
mortgage market volumes. PIRM adjusted EBITDA increased 2% to $60
million. UWS adjusted EBITDA rose 26% to $104 million driven by organic
growth, including the previously mentioned revenue recognition benefit
of approximately $23 million resulting from the amendment of a long-term
contract, as well as the scaling of CoreLogic's valuations solutions
platform, which more than offset lower U.S. mortgage loan unit volumes
and the wind down of certain non-core product lines. Adjusted EBITDA
margin was up approximately 410 basis points to 33%.

Productivity Programs

As previously announced, the Company intends to incur cash and non-cash
charges of approximately $15 million over the course of 2018 relating to
its expansion of certain efficiency programs and infrastructure
enhancements. 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. This program is expected to
increase overall margins in line with long term strategic targets by
improving operating efficiency and accelerating the transformation of
certain technology and data platforms. In addition, the Company expects
to further consolidate its real estate footprint, reduce SG&A costs and
automate and/or outsource certain business activities.

Liquidity and Capital Resources

As of June 30, 2018, the Company had cash and cash equivalents of $85
million compared with $119 million at December 31, 2017. Total debt as
of June 30, 2018 was $1,830 million versus $1,777 million as of December
31, 2017. As of June 30, 2018, the Company had available capacity on its
revolving credit facility of $580 million.

Net operating cash provided by continuing operations for the twelve
months ended June 30, 2018 was $392 million. Free cash flow (FCF) for
the twelve months ended June 30, 2018 totaled $314 million, which
represented 61% 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.

In April 2018, the Company acquired ALM for $120 million which was
funded through available capacity on its revolving credit facility. ALM
is headquartered in Oklahoma City and provides subscription based
software solutions to more than 40,000 appraiser professionals across
the United States.

In the second quarter of 2018, the Company repurchased 872,000 of its
common shares for $45 million.

Updated Financial Guidance and Assumptions

Based on the actual first half financial results and currently available
projections of market conditions including U.S. origination market
volumes for the second half of 2018, the Company is providing the
following updates to its 2018 full year guidance:

($ in millions except adjusted EPS)        

January 31, 2018
Outlook/Guidance

       

July 25, 2018
Guidance Update

Revenue         $1,825 - $1,875         $1,825 - $1,875
Adjusted EBITDA(1)         $455 - $485         $480 - $500
Adjusted EPS(1)         $2.45 - $2.65         $2.70 - $2.85

(1) Definition of adjusted results, 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 revised 2018 guidance ranges provided above reflect the following
updated estimates and assumptions:

  • U.S. mortgage loan origination unit volumes expected to decline
    approximately 10% to 15% from 2017 levels.
  • A full-year net benefit of approximately $20 million attributable to
    accelerated revenue recognition resulting from the amendment of a
    long-term contract discussed earlier. This benefit is expected to be
    partially offset by increased research and development costs of
    approximately $5 to $10 million related to the enhancement of the
    Company's data visualization and solutions delivery capabilities.

Teleconference/Webcast

CoreLogic management will host a live webcast and conference call on
Thursday, July 26, 2018, 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:
1-844-861-5502 for U.S./Canada callers or 412-858-4604 for international
callers. Additional detail on the Company's results are included in the
quarterly financial supplement, available on the Investor Relations page
at http://investor.corelogic.com.

A replay of the webcast will be available on the CoreLogic investor
website for 10 days and through the conference call number
1-877-344-7529 for U.S. participants, 855-669-9658 for Canada
participants or 1-412-317-0088 for international participants using
Conference ID 10121379.

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 the Company's
productivity excellence, the Company's overall financial performance,
including future revenue, adjusted EBITDA and adjusted EPS growth, and
the Company's margin, tax rate and cash flow profile; and the Company's
plans to continue to return capital to shareholders through the share
repurchase program. 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. These additional risks and
uncertainties include but are not limited to: our ability to protect our
information systems against data corruption, cyber-based attacks or
network security breaches; limitations on access to or increase in
prices for 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; systems interruptions that may
impair the delivery of our products and services; difficult conditions
in the mortgage and consumer lending industries and the economy
generally; our ability to protect proprietary rights; our technology and
growth strategies and our ability to effectively and efficiently
implement them; risks related to the outsourcing of services and
international operations; our indebtedness and the restrictions in our
various debt agreements; our ability to realize the anticipated benefits
of certain acquisitions and/or divestitures and the timing thereof; the
inability to control the operations or dividend policies of our
partially-owned affiliates; and impairments in our goodwill or other
intangible assets. 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 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. The Company is not
able to provide a reconciliation of projected adjusted EBITDA or
projected adjusted earnings per share to respective GAAP results due to
the unknown effect, timing and potential significance of special charges
or gains.

The Company believes that its presentation of non-GAAP measures, such as
adjusted EBITDA, adjusted EPS and FCF, provides useful supplemental
information to investors and management regarding the Company's
financial condition and results. Adjusted EBITDA is defined as net
income from continuing operations adjusted for interest, taxes,
depreciation and amortization, stock compensation, non-operating
gains/losses and other adjustments. Adjusted EPS is defined as income
from continuing operations per diluted share, adjusted for stock
compensation, amortization of acquisition-related intangibles,
non-operating gains/losses, and other adjustments, then tax affected at
an assumed effective tax rate of 26% and 35% for 2018 and 2017,
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 CoreLogic, which limits
comparability between companies.

CLGX-F

CORELOGIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

 
   

For the Three Months
Ended

   

For the Six Months
Ended

June 30, June 30,
(in thousands, except per share amounts) 2018     2017 2018     2017
Operating revenues $ 488,401 $ 473,978 $ 933,301 $ 913,829
Cost of services (excluding depreciation and amortization shown
below)
239,346 249,162 478,735 501,128
Selling, general and administrative expenses 112,022 103,552 226,974 215,400
Depreciation and amortization 47,396   42,871   93,536   86,343  
Total operating expenses 398,764   395,585   799,245   802,871  
Operating income 89,637   78,393   134,056   110,958  
Interest expense:
Interest income 224 592 754 930
Interest expense 18,987   14,535   36,679   28,666  
Total interest expense, net (18,763 ) (13,943 ) (35,925 ) (27,736 )
Gain/(loss) on investments and other, net 2,128   (4,353 ) 2,289   (3,418 )
Income from continuing operations before equity in earnings/(losses)
of affiliates and income taxes
73,002 60,097 100,420 79,804
Provision for income taxes 17,307   18,635   16,596   24,909  
Income from continuing operations before equity in earnings/(losses)
of affiliates
55,695 41,462 83,824 54,895
Equity in earnings/(losses) of affiliates, net of tax 2,837   (280 ) 3,070   (1,004 )
Net income from continuing operations 58,532 41,182 86,894 53,891
(Loss)/income from discontinued operations, net of tax (16 ) 78 (91 ) 2,495
Gain from sale of discontinued operations, net of tax       312  
Net income $ 58,516   $ 41,260   $ 86,803   $ 56,698  
Basic income per share:
Net income from continuing operations $ 0.72 $ 0.49 $ 1.07 $ 0.64
(Loss)/income from discontinued operations, net of tax 0.03
Gain from sale of discontinued operations, net of tax        
Net income $ 0.72   $ 0.49   $ 1.07   $ 0.67  
Diluted income per share:
Net income from continuing operations $ 0.71 $ 0.48 $ 1.05 $ 0.63
(Loss)/income from discontinued operations, net of tax 0.03
Gain from sale of discontinued operations, net of tax        
Net income $ 0.71   $ 0.48   $ 1.05   $ 0.66  
Weighted-average common shares outstanding:
Basic 81,284 84,548 81,269 84,490
Diluted 82,440 86,097 82,685 86,224
 

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

CORELOGIC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

UNAUDITED

       
(in thousands, except par value) June 30, December 31,
Assets 2018 2017
Current assets:
Cash and cash equivalents $ 85,031 $ 118,804
Accounts receivable (less allowance for doubtful accounts of $7,187
and $8,229 as of June 30, 2018 and December 31, 2017, respectively)
256,225 256,595
Prepaid expenses and other current assets 52,438 47,220
Income tax receivable 16,332   7,649  
Total current assets 410,026 430,268
Property and equipment, net 453,780 447,659
Goodwill, net 2,317,410 2,250,599
Other intangible assets, net 492,120 475,613
Capitalized data and database costs, net 326,868 329,403
Investment in affiliates, net 42,305 38,989
Deferred income tax assets 127 366
Other assets 114,197   104,516  
Total assets $ 4,156,833   $ 4,077,413  
Liabilities and Equity
Current liabilities:
Accounts payable and other accrued expenses $ 159,975 $ 145,655
Accrued salaries and benefits 64,174 93,717
Contract liabilities, current 322,700 303,948
Current portion of long-term debt 49,658   70,046  
Total current liabilities 596,507 613,366
Long-term debt, net of current 1,759,050 1,683,524
Contract liabilities, net of current 511,837 504,900
Deferred income tax liabilities 106,815 102,571
Other liabilities 158,385   165,176  
Total liabilities 3,132,594   3,069,537  
 
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; 80,944
and 80,885 shares issued and outstanding as of June 30, 2018 and
December 31, 2017, respectively
1 1
Additional paid-in capital 186,816 224,455
Retained earnings 940,314 877,111
Accumulated other comprehensive loss (102,892 ) (93,691 )

Total stockholders' equity

1,024,239   1,007,876  
Total liabilities and equity $ 4,156,833   $ 4,077,413  
 

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

CORELOGIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

   
For the Six Months Ended
June 30,
(in thousands) 2018     2017
Cash flows from operating activities:
Net income $ 86,803 $ 56,698
Less: (Loss)/income from discontinued operations, net of tax (91 ) 2,495
Less: Gain from sale of discontinued operations, net of tax   312  
Net income from continuing operations 86,894 53,891
Adjustments to reconcile net income from continuing operations to
net cash provided by operating activities:
Depreciation and amortization 93,536 86,343
Amortization of debt issuance costs 2,744 2,870
Provision for bad debt and claim losses 7,480 7,939
Share-based compensation 19,799 20,939
Equity in (earnings)/losses of affiliates, net of taxes (3,070 ) 1,004
Gain on sale of property and equipment (19 ) (231 )
Deferred income tax 8,743 6,193
(Gain)/loss on investment and other, net (2,289 ) 3,418
Change in operating assets and liabilities, net of acquisitions:
Accounts receivable 259 (2,070 )
Prepaid expenses and other current assets (6,075 ) (4,161 )
Accounts payable and other accrued expenses (27,234 ) (74,371 )
Contract liabilities (13,692 ) 24,675
Income taxes (9,704 ) (13,445 )
Dividends received from investments in affiliates 775 1,097
Other assets and other liabilities (9,732 ) 22,357  
Net cash provided by operating activities - continuing operations 148,415 136,448
Net cash (used in)/provided by operating activities - discontinued
operations
(4 ) 3,663  
Total cash provided by operating activities $ 148,411   $ 140,111  
Cash flows from investing activities:
Purchases of property and equipment $ (21,378 ) $ (20,237 )
Purchases of capitalized data and other intangible assets (18,589 ) (17,202 )
Cash paid for acquisitions, net of cash acquired (141,056 )
Purchases of investments (70,000 )
Proceeds from sale of property and equipment 197 304
Proceeds from investments 980    
Net cash used in investing activities - continuing operations (179,846 ) (107,135 )
Net cash provided by investing activities - discontinued operations    
Total cash used in investing activities $ (179,846 ) $ (107,135 )
Cash flows from financing activities:
Proceeds from long-term debt $ 120,095 $ 70,000
Repayment of long-term debt (68,898 ) (35,234 )
Proceeds from issuance of shares in connection with share-based
compensation
17,566 4,504
Payment of tax withholdings related to net share settlements (11,682 ) (13,420 )
Shares repurchased and retired (63,322 ) (40,950 )
Net cash used in financing activities - continuing operations (6,241 ) (15,100 )
Net cash provided by financing activities - discontinued operations    
Total cash used in financing activities $ (6,241 ) $ (15,100 )
Effect of exchange rate on cash, cash equivalents and restricted cash 1,379 (993 )
Net change in cash, cash equivalents and restricted cash (36,297 ) 16,883
Cash, cash equivalents and restricted cash at beginning of period 132,154 89,974
Less: Change in cash, cash equivalents and restricted cash -
discontinued operations
(4 ) 3,663
Plus: Cash swept (to)/from discontinued operations (4 ) 3,663  
Cash, cash equivalents and restricted cash at end of period $ 95,857   $ 106,857  
 

Please refer to the full Form 10-Q 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 June 30, 2018
(in thousands) PIRM     UWS     Corporate     Elim     CoreLogic
Net income/(loss) from continuing operations $ 32,295     $ 85,868     $ (59,631 )     $     $ 58,532
Income taxes 18,250 18,250
Depreciation and amortization 25,512 16,483 5,401 47,396
Interest expense, net 219 79 18,465 18,763
Share-based compensation 1,751 2,052 7,319 11,122
Non-operating gains (2,700 ) (72 ) (2,772 )
Efficiency investments 521 4,224 4,745
Transaction costs 1,747 827 2,574
Amortization of acquired intangibles included in equity in earnings
of affiliates
233                         233  
Adjusted EBITDA $ 59,578       $ 104,482       $ (5,217 )     $       $ 158,843  
 
    For the Three Months Ended June 30, 2017
(in thousands) PIRM     UWS     Corporate     Elim     CoreLogic
Net income/(loss) from continuing operations $ 31,470     $ 60,470     $ (50,758 )     $     $ 41,182
Income taxes 18,461 18,461
Depreciation and amortization 24,132 13,605 5,134 42,871
Interest expense, net 463 392 13,088 13,943
Share-based compensation 1,413 2,264 5,095 8,772
Non-operating losses 679 6,304 1,020 8,003
Efficiency investments 181 181
Transaction costs 1,177 1,177
Amortization of acquired intangibles included in equity in losses of
affiliates
157       87                   244
Adjusted EBITDA $ 58,314       $ 83,122       $ (6,602 )     $       $ 134,834
 

CORELOGIC, INC.

RECONCILIATION OF ADJUSTED EPS

UNAUDITED

   
For the Three Months Ended June 30,
(diluted income per share) 2018     2017
Net income from continuing operations $ 0.71 $ 0.48
Share-based compensation 0.13 0.10
Non-operating (gains)/losses (0.03 ) 0.09
Efficiency investments 0.06
Transaction costs 0.03 0.01
Depreciation and amortization of acquired software and intangibles 0.23 0.19
Income tax effect on adjustments (0.13 ) (0.15 )
Adjusted EPS $ 1.00   $ 0.72  
 

CORELOGIC, INC.

RECONCILIATION TO FREE CASH FLOW

UNAUDITED

   
(in thousands)

For the Twelve Months
Ended June 30, 2018

Net cash provided by operating activities - continuing operations $ 391,897
Purchases of property and equipment (41,649 )
Purchases of capitalized data and other intangible assets (36,377 )
Free Cash Flow $ 313,871  
 

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