CoreLogic, Inc. (CLGX)

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CoreLogic, INC. (CLGX)

Acquisition of Marshall & Swift/Boeckh and DataQuick Information Systems Conference

July 01, 2013 9:00 am ET


Dan Smith - Senior Vice President, Investor Relations

Anand K. Nallathambi - Chief Executive Officer, President, Director and Member of Acquisition Committee

Frank D. Martell - Chief Financial Officer


Darrin D. Peller - Barclays Capital, Research Division

Kevin D. McVeigh - Macquarie Research

Carter Malloy - Stephens Inc., Research Division

Brandon Burke Dobell - William Blair & Company L.L.C., Research Division

Geoffrey M. Dunn - Dowling & Partners Securities, LLC



Good day, ladies and gentlemen, and welcome to the CoreLogic Inc. conference call to discuss the acquisition of Marshall & Swift/Boeckh and DataQuick Information Systems conference call. My name is Sahisha, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Dan Smith, SVP of Investor Relations. Please proceed.

Dan Smith

Thank you. Good morning, and welcome to the CoreLogic market update call to discuss the acquisition of Marshall & Swift/Boeckh and DataQuick Information Systems. Speaking today will be CoreLogic's President and CEO, Anand Nallathambi; and CFO, Frank Martel.

Before we begin, let me make a few important points. First, we have posted our slide presentation, which includes additional details on our website. Second, please note that during today's presentation, we may make forward-looking statements within the meaning of the federal securities laws, including statements concerning our expectations regarding the timing, integration and financial impact of this transaction; expected business and operational plans; performance outlook; plans on returning capital, acquisition and growth strategies; and our expectations regarding industry conditions. All of these statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. For further details concerning these risks and uncertainties, please refer to our SEC filings, including the most recent annual report on Form 10-K and subsequently filed 10-Q.

Finally, with respect to financial guidance, CoreLogic will update our full year 2013 financial guidance, excluding the impact of this transaction, with the release of our second quarter 2013 financial results later in the month. We will revise this guidance to reflect the impact of this acquisition upon the closing of the transaction.

Thanks, and now let me introduce our President and CEO, Anand Nallathambi.

Anand K. Nallathambi

Thanks, Dan, and good morning, everyone. This morning, we announced that CoreLogic has entered into a definitive agreement to acquire Marshall & Swift/Boeckh and DataQuick Information Systems. I will begin the call today with an overview of the strategic rationale behind this transaction, and then Frank will summarize the acquisition and related financial details. We will conclude with Q&A.

Over the past 2 years, CoreLogic has delivered progressively stronger operating results, including record financial results in 2012 and so far this year. Our consistent track record of delivering strong revenue and profit growth and significant margin expansion is a result of our laser-like focus on a strategy that leverages the company's unique data assets and analytical capabilities, as well as the market-leading position and scale of our servicing businesses.

The acquisition of Marshall & Swift/Boeckh, or MSB, and DataQuick is a compelling and logical next step in the strategic transformation of CoreLogic. These firms benefit from data-driven, subscription-based business models. The acquisition materially expands our Data & Analytics segment, in line with our stated goal to grow this segment to greater than 50% of total company revenues within the next 3 years.

We're also adding unique and complementary data assets and analytical capabilities to create a scaled, market-leading insurance solutions group. The acquisition is expected to be accretive to 2013 financial results, and it should expand our overall EBITDA margins. As we aggressively integrate MSB and DataQuick into our operations, we expect to realize additional cost synergies and growth opportunities beyond those currently factored into the transaction assumptions, which Frank will cover later.

It is also important to note that our focus on driving revenue growth, margin expansion and high rates of free cash flow has given us the financial flexibility to purchase MSB and DataQuick and simultaneously increase our share repurchase program while maintaining prudent debt levels. Over the past 2 years, we have been transforming CoreLogic into a higher-growth, higher-margin company by focusing on 6 strategic pillars. These pillars have been discussed on our previously -- previous quarterly earnings calls and during our recent Investor Day in May. These include expanding our D&A segment; driving scale and operating leverage in Mortgage Origination Services; expanding our insurance and geospatial footprint; fully monetizing our data assets; reducing costs through Project 30 and TTI; and finally, consistently returning capital to our shareholders. The integration of MSB and DataQuick meaningfully accelerates progress towards these strategic imperatives.

I'll now turn the call over to Frank to provide a summary of the terms of the acquisition and a more detailed description of MSB and DataQuick.

Frank D. Martell

Thanks, Anand. CoreLogic is purchasing MSB and DataQuick from the Decision Insight Information Group, a portfolio company of TPG Capital, in a privately negotiated transaction. The total consideration is $661 million paid in cash. In addition to the purchase price allocable to MSB and DataQuick, this amount reflects the expected present value of cash tax benefits from acquired amortizable intellectual property and goodwill, as well as net operating loss carryforwards totaling approximately $115 million and the acquisition of MSB's 29.5% ownership interest in Symbility Solutions valued at $23 million.

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