CoreLogic Discontinues Reseller Businesses as Part of Previously Announced Strategic Plan
CoreLogic (NYSE: CLGX), a leading global provider of property information, insight, analytics and data-enabled solutions, today provided additional information related to the pro-forma impacts of the planned divestitures of its Reseller Businesses.
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"The discontinuation of and sale of our reseller operations is expected to significantly enhance our revenue profile and increase margins. In terms of revenue, the exit from these operations will accelerate our shift to higher fixed recurring revenue streams and significantly reduces our exposure to mortgage volatility," said Frank Martell, President and Chief Executive Officer.
Exit of Reseller Businesses
As announced on July 23, 2020, CoreLogic plans to divest its Reseller Businesses which include Tenant Screening and Credit and Borrower Verification Solutions. Consistent with Generally Accepted Accounting Principles, these businesses will be reported as Discontinued Operations as of September 30, 2020 and will be retrospectively classified as such in the Company's consolidated financial statements.
Consistent with its strategic program, the Company believes that the sale of its Reseller Businesses will (i) accelerate investment and growth of its core data-driven solutions, (ii) raise the Company's organic growth profile across its operating segments to more than 5%, (iii) generate sustained adjusted EBITDA margins of greater than 35%, and (iv) increase fixed recurring revenue to approximately 55% of total revenues. In addition, the Company believes these business exits will significantly lower its exposure to mortgage market volatility impacts and raise the share of non-mortgage revenue from approximately 40% to 45%.
Financial Guidance Adjusted for Reseller Business Exits
The tables below illustrate the expected impact of the Reseller Business divestitures based on CoreLogic's previously issued financial guidance.
In addition, the Company has posted additional supplemental information related to the business transformation and financial guidance discussed above which can be found on the CoreLogic investor website at http://investor.corelogic.com.
CoreLogic (NYSE: CLGX), the leading provider of property insights and solutions, promotes a healthy housing market and thriving communities. Through its enhanced property data solutions, services and technologies, CoreLogic enables real estate professionals, financial institutions, insurance carriers, government agencies and other housing market participants to help millions of people find, buy, and protect their homes. 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 CoreLogic's expected financial results, including in the second half of fiscal year 2020 and fiscal years 2021 and 2022; overall mortgage market volumes; market opportunities; stockholder value creation, repurchases of our shares, and our strategic plans or growth strategy. 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 and Part II, Item 1A of our most recent Quarterly Report on Form 10-Q, as such risk factors may be amended, supplemented, or superseded from time to time by other reports we file with the Securities and Exchange Commission. These risks and uncertainties include but are not limited to: any potential developments related to the unsolicited proposal we received from Senator Investment Group, LP and Cannae Holdings, Inc. on June 26, 2020; any impact resulting from COVID-19; our ability to protect our information systems against data corruption, cyber-based attacks or network security breaches; limitations on our ability to repurchase our shares; changes in prices at which we are able to repurchase our shares; limitations on access to or increase in prices for data from external sources, including government and public record sources; systems interruptions that may impair the delivery of our products and services; 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; difficult conditions in the mortgage and consumer lending industries and the economy generally; risks related to the outsourcing of services and international operations; our ability to realize the anticipated benefits of certain acquisitions and/or divestitures and the timing thereof; impairments in our goodwill or other intangible assets; and our ability to generate sufficient cash to service our debt. The forward-looking statements speak only as of the date they are made. CoreLogic 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, including adjusted EBITDA and adjusted EPS, which are provided only as supplemental information. Investors should consider these non-GAAP financial measures only in conjunction with their most directly comparable GAAP financial measures. These non- GAAP measures are not in accordance with, or a substitute for, U.S. GAAP. CoreLogic believes that its presentation of these non-GAAP measures provides useful supplemental information to investors and management regarding CoreLogic's financial condition and results of operations. Adjusted EBITDA is defined as net income from continuing operations adjusted for interest, taxes, depreciation and amortization, share-based compensation, non-operating gains/losses, and other adjustments. Adjusted EPS is defined as diluted income from continuing operations, net of tax per share, adjusted for share-based compensation, amortization of acquisition-related intangibles, non-operating gains/losses, and other adjustments; and assumes an effective tax rate of 26% for 2020. Other firms may calculate non-GAAP measures differently than CoreLogic, which limits comparability between companies. Because the non-GAAP measures for future periods included herein are forward-looking, CoreLogic is not able to provide a reconciliation, without unreasonable efforts, of such forward-looking guidance to the most directly comparable GAAP financial measure due to the unknown effect, timing, and potential significance of special charges or gains that are material to the comparable GAAP financial measure.
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