Revenue Growth and Cost Management Programs Drive Higher Margins and EPS
(PRNewswire) — CoreLogic (NYSE: CLGX), a leading global property information, analytics and data-enabled services provider, today reported financial results for the quarter ended June 30, 2015."CoreLogic delivered another strong operating performance in the second quarter. We grew revenues and gained market share in a number of our core operations. We also continued to invest in our NextGen technology platform and in our product and service development," said Anand Nallathambi, President and Chief Executive Officer of CoreLogic. "As we move forward, we are squarely focused on enabling and accelerating the growth of our unique underwriting, compliance and risk management-related solutions which are powered by our industry-leading property data, analytics and data-enabled workflow tools and platforms."
"In addition to top-line growth, we expanded adjusted EBITDA margins to over 30% in the second quarter. Higher margins were the result of favorable revenue mix, operating leverage generated by our mortgage-related businesses and cost management," added Frank Martell, Chief Operating and Financial Officer of CoreLogic. "The durability of our business model allows us to continue to invest in our products and services, technology leadership and operational improvements and, at the same time, return significant amounts of capital to our shareholders and manage our debt balances."
Second-Quarter Financial Highlights
Second quarter revenues totaled $386.0 million, up 5.5% (7.2% on a constant-currency basis) from prior-year levels, as higher U.S. mortgage origination volumes, market share gains in core underwriting solutions and demand for property data and analytics drove improved results. TPS revenues increased 8.0% year-over-year to $214.0 million driven primarily by higher demand for mortgage-related underwriting solutions and market share growth in our payment processing, flood services and credit services units. D&A revenues were $174.6 million, up 2.2% (5.8% on a constant-currency basis) compared with the prior year. Higher D&A revenues were driven principally by growth in insurance, spatial solutions, international and property data revenues, which more than offset the impact of unfavorable foreign currency translation.
Operating income from continuing operations totaled $60.7 million for the second quarter compared with $41.0 million for the second quarter of 2014. The 48.0% increase in operating income resulted primarily from higher revenues, favorable operating leverage in our mortgage-related underwriting solutions businesses and lower expenses related to ongoing cost management and the Company's strategic transformation program. These cost-related benefits were partially offset by increased depreciation and amortization. Second quarter 2015 operating income margin was 15.7%, up from 11.2% in 2014.
Second quarter net income from continuing operations totaled $33.0 million compared with $26.7 million in 2014. The $6.3 million year-over-year increase was driven primarily by revenue growth and margin expansion, which more than offset the 2014 investment gains and costs associated with the Company's amendment of its credit agreement. Diluted EPS from continuing operations totaled $0.36 for the second quarter of 2015 compared with $0.29 in the second quarter of 2014. Adjusted diluted EPS totaled $0.55, up 41.0%, reflecting the positive impacts of revenue growth, margin improvement and share repurchases.
Adjusted EBITDA totaled $117.8 million in the second quarter 2015 compared with $97.3 million in the same prior year period. Second quarter 2015 adjusted EBITDA margin was 30.5%, up from 26.6% in 2014. The increase in adjusted EBITDA was principally the result of revenue growth, favorable business mix, lower costs related to integrating acquisitions and cost productivity benefits, which were partially offset by investments in product and service development as well as technology, compliance and data monetization initiatives. TPS adjusted EBITDA increased $22.1 million or 43.4% to $73.1 million driven by operating leverage, cost management benefits and lower acquisition-related integration costs. D&A adjusted EBITDA declined $1.1 million or 2.0% to $54.5 million as growth in insurance and geospatial revenues and cost containment benefits was offset by investments in product and service development, technology platforms, compliance infrastructure, data monetization initiatives, and unfavorable currency translation. The impact of unfavorable currency translation on second quarter D&A results was $1.8 million.
Cost Management And Technology Excellence
In line with the Company's demonstrated commitment to operational excellence and progressive growth in profit margins, during the first quarter of 2015, CoreLogic announced a multi-year productivity and cost management program which is expected to reduce expense, on an annual run-rate basis, by approximately $60 million by 2018. Savings are expected to be realized through the reduction of selling, general and administrative costs, outsourcing certain business process functions, consolidation of facilities and other operational improvements. This program will incorporate expected savings from the completion of Phase I of the Company's previously announced TTI. TTI Phase I, completed during the second quarter of 2015, focused principally on the transition of the Company's existing technology infrastructure to a managed service arrangement with Dell Services. The second phase of the TTI (TTI-NextGen) relates to the development of the Company's next generation technology platform which is designed to augment and eventually replace substantial portions of our legacy systems.
The Company expects to realize approximately $15 million in total savings from its cost productivity and management program during 2015, including $10 million in savings attributable to the completion of TTI Phase I. Additional run-rate savings of $30 million are targeted in 2016 with additional savings of $15 million expected during 2017. Cash and non-cash charges associated with this program are expected to aggregate approximately $20 million and will be incurred over the course of the three-year program.
Liquidity and Capital Resources
At June 30, 2015, the Company had cash and cash equivalents of $113.1 million compared with $104.7 million at December 31, 2014. As of June 30, 2015, the Company had available capacity on its revolving credit facility of $550.0 million. Total debt as of June 30, 2015 was approximately $1.3 billion. During April 2015, the Company completed an amendment to its senior secured credit agreement which increased borrowing capacity and lowered interest rates. In addition, the amendment provided for increased flexibility for acquisitions and certain types of investments as well as an extension of the maturity by approximately thirteen months.
Free cash flow (FCF) for the twelve months ended June 30, 2015 totaled $256.1 million, which represented 61.5% 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. Net operating cash provided by continuing operations for the twelve months ended June 30, 2015 was $340.6 million .
