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