second quarter 2016 - corelogic earnings release...(unaudited) 3q 2013 4q 2013 1q 2014 2q 2014 3q...
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| © 2016 CoreLogic, Inc. ■ Proprietary & Confidential
Second Quarter 2016 Financial Results
July 25, 2016
1
Safe Harbor Statement
2
Certain statements made in this presentation are forward-looking statements within the meaning of the federal securities laws, including but
not limited to those statements related to the Company's updated financial guidance and market expectations; investment and strategic growth
plans, cost reductions, and productivity excellence; the Company's overall financial performance, and the Company's margin and cash flow
profile. 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, as amended or updated by our Quarterly Reports on
Form 10-Q. These additional risks and uncertainties include but are not limited to: 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; compromises in the security of our data, including the transmission of confidential information or systems interruptions; difficult
conditions in the mortgage and consumer lending industries and the economy generally; our ability to protect proprietary rights; our cost
reduction program, technology and growth strategies, including the launch of the VSG, 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.
2Q16 Financial Highlights
3
(1) These are non-GAAP financial measures. For a reconciliation to the most directly comparable GAAP measures, see the reconciliations included in the appendix.
Revenues increased 30% from 2Q15, driven by 72% PI growth and RMW market
outperformance which more than offset unfavorable currency translation.
Operating income increased from 2Q15 levels as operating upsides more than offset
VSG-related transaction and integration expenses, increased investments in cyber-
security and compliance as well as severance and real estate consolidation costs.
Adjusted EPS was $0.65 per share, up 18% reflecting the positive impacts of
growth, reduced operating expenses and share repurchases.
2Q 2016 1Q 2016 2Q 2015
1 Revenue $500.2 $453.5 $386.0
2 Operating Income 75.5 57.3 60.7
3 Adjusted EPS1 $0.65 $0.48 $0.55
($ millions, except EPS)
Segment Results1
4
(1) These are non-GAAP financial measures. For a reconciliation to the most directly comparable GAAP measures, see the reconciliations included in the appendix.
Business Drivers
Property Intelligence results reflect the
addition of the VSG and growth in
insurance and spatial solutions and
international operations that more than
offset unfavorable currency
translation. EBITDA reflects higher
revenues and cost reduction program
benefits which more than offset costs
associated with the VSG launch,
severance and other programs.
RMW results reflect the benefits of
pricing and market share gains in tax,
credit and flood zone determination
services which were offset by lower
project-related and tenant screening
revenues as well as impact of the wind
down of non-core product lines.
2Q 2016 1Q 2016 2Q 2015
1 Property Intelligence $276.7 $241.4 $161.1
2 Risk Management & Workflow 226.2 215.0 227.6
3 Corporate & Eliminations (2.7) (2.9) (2.7)
4 Revenue $500.2 $453.5 $386.0
5 Property Intelligence 70.7 49.7 53.3
6 Risk Management & Workflow 74.3 62.2 74.3
7 Corporate & Eliminations (9.3) (5.8) (9.7)
8 Adjusted EBITDA1 $135.7 $106.1 $117.8
9 Property Intelligence 25.6% 20.6% 33.1%
10 Risk Management & Workflow 32.9% 28.9% 32.6%
11 Corporate & Eliminations N/M N/M N/M
12 Adjusted EBITDA Margin1 27.1% 23.4% 30.5%
($ millions)
Consolidated CoreLogic
5
Historical Results
($ millions)
(Unaudited) 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
Net Income from Continuing
Operations43.4$ (9.4)$ (2.9)$ 27.0$ 50.1$ 16.8$ 29.5$ 33.3$ 28.6$ 38.1$ 27.5$ 40.4$
Income Taxes 23.3 (14.7) 1.6 11.0 16.8 9.2 13.9 17.3 24.1 11.3 15.9 20.6
Stock-based compensation 3.9 6.2 8.0 7.7 6.3 3.3 8.7 9.8 7.9 9.4 9.5 9.8
Non-Operating Gains/(Losses) (6.6) - 4.1 (6.0) (13.8) (0.1) 0.0 1.6 - (35.5) (1.9) (2.4)
Strategic & Efficiency Investment 1.1 2.8 0.8 0.7 0.1 - 0.3 0.3 2.0 4.8 0.0 0.4
Transactional Costs 1.5 2.5 8.5 1.1 (0.1) (0.5) 0.1 1.7 0.8 2.9 1.0 5.1
Depreciation and Amortization 29.4 29.6 29.5 35.4 35.8 37.8 35.9 37.3 36.4 37.0 39.3 43.3
Impairment Loss - 42.7 0.1 4.1 0.7 0.1 0.1 - - 3.7 0.3 -
Interest Expense 11.5 12.7 15.7 16.3 17.5 17.5 12.4 16.6 16.6 15.8 13.7 17.8
Amortization of Acquired Software
(Equity in Earnings of Affiliates)- - - - - - - - - - 0.7 0.7
Adjusted EBITDA 107.5$ 72.5$ 65.4$ 97.3$ 113.4$ 84.1$ 100.9$ 117.8$ 116.4$ 87.5$ 106.1$ 135.7$
Property Intelligence
6
Historical Results
($ millions)
(Unaudited) 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
Net Income from Continuing
Operations36.9$ 3.2$ 13.2$ 32.7$ 31.0$ 23.1$ 25.7$ 24.6$ 25.2$ 19.1$ 16.7$ 33.1$
Income Taxes - - - - - - - - - - - -
Stock-based compensation (0.4) 1.3 1.8 1.7 1.6 0.7 2.0 2.8 1.3 2.2 2.6 3.1
Non-Operating Gains/(Losses) (6.6) - - (6.0) - - - - - - 1.1 (1.1)
Strategic & Efficiency Investment - - - - - - - - 0.3 0.1 - -
Transactional Costs - 0.3 - - - - - 1.4 0.3 0.4 0.0 1.9
Depreciation and Amortization 17.2 17.6 18.7 24.3 24.8 24.8 24.2 24.4 23.1 25.2 27.7 32.4
Impairment Loss - 14.8 0.1 1.5 0.7 0.1 - - - - 0.2 -
Interest Expense (0.0) 0.0 0.2 0.0 (0.0) (0.1) 0.1 0.1 0.1 0.5 0.6 0.6
Amortization of Acquired Software
(Equity in Earnings of Affiliates)- - - - - - - - - - 0.7 0.7
Adjusted EBITDA 47.1$ 37.2$ 34.0$ 54.3$ 58.1$ 48.5$ 51.9$ 53.3$ 50.2$ 47.4$ 49.7$ 70.7$
Risk Management & Workflow
7
Historical Results
($ millions)
(Unaudited) 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
Net Income from Continuing
Operations59.0$ 3.2$ 31.7$ 40.3$ 53.1$ 41.6$ 50.9$ 64.9$ 64.1$ 36.2$ 52.9$ 66.3$
Income Taxes - - - - - - - - - - - -
Stock-based compensation 2.1 2.4 1.5 1.3 1.1 0.7 1.2 1.3 1.6 1.5 1.6 1.4
Non-Operating Gains/(Losses) - - - - - - - - - - - -
Strategic & Efficiency Investment - - - - - - - - 0.4 0.6 - -
Transactional Costs - - - - - - - - - - - -
Depreciation and Amortization 9.4 9.1 7.9 8.1 8.0 7.7 8.2 8.0 9.5 8.0 7.6 6.6
Impairment Loss - 28.0 - 2.5 - - 0.1 - - 3.7 0.1 -
Interest Expense 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Adjusted EBITDA 70.5$ 42.7$ 41.0$ 52.3$ 62.1$ 50.1$ 60.4$ 74.3$ 75.6$ 50.1$ 62.2$ 74.3$
Corporate & Eliminations
8
Historical Results
($ millions)
(Unaudited) 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
Net Income from Continuing
Operations(52.5)$ (15.8)$ (47.8)$ (46.0)$ (34.0)$ (47.9)$ (47.1)$ (56.2)$ (60.7)$ (17.1)$ (42.1)$ (59.0)$
Income Taxes 23.3 (14.7) 1.6 11.0 16.8 9.2 13.9 17.3 24.1 11.3 15.9 20.6
Stock-based compensation 2.1 2.5 4.8 4.8 3.7 1.9 5.6 5.7 5.0 5.7 5.3 5.3
Non-Operating Gains/(Losses) - - 4.1 - (13.8) (0.1) - 1.6 - (35.5) (3.0) (1.3)
Strategic & Efficiency Investment 1.1 2.8 0.8 0.7 0.1 - 0.3 0.3 1.4 4.1 0.0 0.4
Transactional Costs 1.5 2.2 8.5 1.1 (0.1) (0.5) 0.1 0.3 0.5 2.5 0.9 3.2
Depreciation and Amortization 2.8 2.9 2.9 2.9 2.9 5.2 3.5 4.9 3.9 3.8 4.0 4.3
Impairment Loss - - - - - - - - - - - -
Interest Expense 11.5 12.7 15.5 16.2 17.5 17.7 12.3 16.5 16.5 15.3 13.0 17.2
Adjusted EBITDA (10.2)$ (7.4)$ (9.6)$ (9.3)$ (6.8)$ (14.5)$ (11.4)$ (9.7)$ (9.4)$ (9.9)$ (5.8)$ (9.3)$
Property Intelligence
9
Revenues
3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
1 Property Information & Analytics 125.2$ 130.2$ 124.7$ 156.8$ 158.4$ 153.3$ 152.2$ 159.9$ 155.8$ 157.6$ 152.7$ 163.0$
2 Valuation Solutions Group 1.3 1.3 1.2 1.3 1.4 1.0 1.2 1.2 1.2 34.3 88.8 113.7
3 Property Intelligence 126.5$ 131.5$ 126.0$ 158.1$ 159.8$ 154.3$ 153.4$ 161.1$ 156.9$ 191.9$ 241.4$ 276.7$
($ millions) Revenue Characteristics & Equity in Earnings
Risk Management & Workflow
10
Revenues & Business Volumes
3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
1 Credit & Screening 82.2$ 69.1$ 77.7$ 81.0$ 79.7$ 68.9$ 86.4$ 90.7$ 86.6$ 73.1$ 87.3$ 92.9$
2 Escrow & Post Closing 149.9 129.4 124.3 129.9 130.4 124.7 127.6 136.9 145.5 128.3 127.7 133.3
3 Risk Management & Work Flow 232.1$ 198.5$ 202.1$ 211.0$ 210.1$ 193.6$ 214.0$ 227.6$ 232.1$ 201.4$ 215.0$ 226.2$
3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
4 Current Period Tax Additions 1,521 1,009 826 924 1,113 1,088 1,025 1,371 1,453 1,195 1,371 1,404
5 Life of Loan Recognition 1,246 848 683 805 987 927 893 1,214 1,299 1,067 1,048 1,284
6 Periodic Recognition 275 161 142 120 126 161 132 157 154 128 324 120
7 Residential Under Tax Service 35,952 36,874 35,186 35,446 35,155 34,985 35,902 35,689 36,092 36,120 36,359 36,409
8 Flood Certifications 1,753 1,315 1,397 1,855 1,848 1,757 2,140 2,361 2,159 1,846 2,086 2,444
9 Credit Inquiries 6,478 5,430 6,483 6,504 6,473 5,443 6,516 6,569 6,755 5,640 6,658 7,695
(Volume in '000)
($ millions) Revenue Characteristics & Equity in Earnings
Key Statistics
Depreciation and Amortization
11
2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
1 Property, Plant & Equipment $19.2 $18.8 $17.8 $19.4 $21.4
2 Acquisition-Related Intangibles 9.7 9.4 10.8 11.7 13.2
3 Capitalized Data 8.3 8.3 8.4 8.5 8.6
4 Total Depreciation & Amortization $37.3 $36.4 $37.0 $39.6 $43.3
($ millions)
Balance Sheet Summary
12
June 30, 2016 December 31, 2015
Assets
1 Cash and Equivalents $72 $99
2 Other Current Assets 369 443
3 Goodwill and Other Intangibles 2,607 2,234
4 Other Assets 971 898
5 Total Assets $4,019 $3,674
Liabilities
6 Current Liabilities $587 $614
7 Long-Term Deferred Revenue 460 449
8 Long-Term Debt, net of Current Portion 1,585 1,288
9 Other Liabilities 277 273
10 Total Liabilities $2,909 $2,624
11 Equity 1,110 1,049
12 Total Liabilities and Equity $4,019 $3,674
($ millions)
Reconciliation of Adjusted EPS
13
(Unaudited) 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
Net income/(loss) from continuing
operations 0.45$ (0.10)$ (0.03)$ 0.29$ 0.54$ 0.18$ 0.32$ 0.36$ 0.31$ 0.42$ 0.31$ 0.45$
Stock-based compensation0.04 0.07 0.09 0.08 0.07 0.04 0.10 0.11 0.09 0.10 0.11 0.11
Non-operating (gains)/losses(0.07) 0.00 0.04 (0.06) (0.15) (0.00) 0.00 0.02 0.00 (0.40) (0.03) (0.03)
Efficiency investments0.01 0.03 0.01 0.01 0.00 0.00 0.00 0.00 0.02 0.05 0.00 0.00
Transactional costs0.02 0.03 0.09 0.01 (0.00) (0.01) 0.00 0.02 0.01 0.03 0.01 0.06
Depreciation and amortization adjustments0.09 0.10 0.08 0.14 0.14 0.14 0.14 0.14 0.14 0.15 0.16 0.18
Amortization of acquired intangibles included
in equity in earnings 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.01
Impairment loss0.00 0.46 0.00 0.04 0.01 0.00 0.00 0.00 0.00 0.04 0.00 0.00
Legal settlement0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.00
Income tax effect *(0.07) (0.33) (0.11) (0.12) (0.13) (0.08) (0.10) (0.10) (0.03) (0.06) (0.10) (0.13)
Adjusted EPS 0.47$ 0.25$ 0.18$ 0.39$ 0.49$ 0.28$ 0.46$ 0.55$ 0.54$ 0.35$ 0.48$ 0.65$
* Reflects the income tax effect on adjustments and the differential impact on assumed tax rate and effective tax rate