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CoreLogic Posts Solid 1Q Earnings

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CoreLogic. (CLGX - Free Report) reported first quarter adjusted earnings of 45 cents per share, surpassing the Zacks Consensus Estimate of 37 cents. Results also exceeded the year-ago quarter’s earnings by 40.6%.

The solid performance came on the back of increase in revenue and profit margins. Lower share count due to share repurchases buoyed the bottom line.

CoreLogic reported net income of 35 cents per share, up 29.6% from 27 cents earned in the year-ago quarter.

Quarterly Operational Update

Operating revenues increased 10.9% year over year to $397.2 million in the first quarter driven by solid contribution from Mortgage Origination Services segment and Data & Analytics segment revenue. It surpassed the Zacks Consensus Estimate of $384 million.

Total operating expenses in the quarter increased 9.3% year over year to $341.9 million. The increase was driven by higher cost of services (up 9.3% year over year), selling, general and administrative expenses (up 6.2% year over year) and depreciation and amortization (up 18% year over year).

The magnitude of increase in revenues more than offset the magnitude of increase in expenses, thus driving up operating income 22.2% year over year to $55.3 million.

Adjusted earnings before interest tax, depreciation and amortization (EBITDA) increased 15.9% year over year to $116.2 million.

Quarterly Segment Update

The Data & Analytics revenues in the segment increased 9.5% year over year to $161.1 million, primarily due to higher demand for property-related information and analytics as well as advisory services related to assisting clients with regulatory compliance

Adjusted EBITDA of $45.7 million were up 6.9% year over year.

The Mortgage Origination Services revenues in the segment increased 24.5% year over year to $176.5 million, due to increased market demand for credit report, tax services and flood certifications, and market-share gains by the tax services business.

Adjusted EBITDA of $72.5 million were up 34.1% year over year.

The Asset Management & Processing Services revenues in the segment decreased 10.9% year over year to $66.8 million, due to a double-digit fall in market volumes of delinquent loans and foreclosure starts, and the impact of exit of unprofitable product lines over the past twelve months.  

Adjusted EBITDA of $7.7 million were down 31.4% year over year.

Cost Reduction Programs

Cost reductions related to CoreLogic's previously announced Project 30 program were approximately $4.8 million in the reported quarter.

In 2012, CoreLogic launched the Technology Transformation Initiative (TTI), an expansion and extension of Project 30, a cost saving program related to workforce reductions in corporate shared services and information technology (IT), outsourcing of certain IT and business process functions and cuts in spending on real estate and outside services. TTI was launched to provide a new platform to CoreLogic's existing technology infrastructure. This is expected to augment the functionality and performance of CoreLogic and reduce application management and development costs. Expenses related to TTI were $7.4 million in the first quarter of 2013.

Share Repurchases

In the reported quarter, CoreLogic repurchased 2.9 million common shares for a total of $75.7 million and raised its 2013 share repurchase target to 5 million from 3 million.

Financial Position

CoreLogic exited the quarter with cash and cash equivalents of $125.6 million, down 15.6% from $148.9 million at Dec 31, 2012.

Net cash flow from operating activities increased 42.3% year over year to $92.5 million.

Free cash flow in the first quarter was $65.4 million.

Long-term debt of CoreLogic declined 0.5% from $792.5 million at year end 2012 to $788.2.4 million at Mar 31, 2013. Debt to capital ratio deteriorated 90 basis points to 41% from 40.1% at year end 2012.

As of Mar 31, 2013, CoreLogic had approximately $500.0 million available in its revolving credit facility.

Business Update

On Mar 20, 2013, CoreLogic purchased Case–Shiller from Fiserv Inc. (FISV - Free Report) for a purchase consideration of $6 million to enhance its residential property insights platform. Case–Shiller, a home price index is a leading expert in home price trends and property valuation services.

The acquisition is estimated to be accretive to 2013 earnings.

Performance of Another Consultant

Exponent Inc. (EXPO - Free Report) reported net earnings of 56 cents per share for the first quarter of 2013, representing a 1.8% year over year decline. However, results exceeded the Zacks Consensus Estimate by 27.3%.

Zacks Rank

CoreLogic currently carries a Zacks Rank #3 (Hold). Among others, Information Services Group Inc. (III - Free Report) with a favorable Zacks Rank #1 (Strong Buy) is scheduled to report its first quarter 2013 results on May 13.

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