Citing the shrinking mortgage market and current trends, CoreLogic (CLGX) has slashed its estimate for 2014’s mortgage originations by 10% to approximately $1 trillion.
CoreLogic made the proclamation in its earnings statement for the second quarter, which reported an increase in revenue of 13% over its subpar first quarter.
The shrinking mortgage market dragged down CoreLogic’s earnings in the first quarter of 2014.
In April, the company reported decreased first-quarter revenue due, in part, to a 60% “contraction” in U.S. mortgage origination volumes. The company’s first-quarter revenue fell to $310.4 million from $331.4 million in 1Q13.
But in 2Q14, the company reversed the first quarter’s negative results and reported a 13% jump in earnings.
CoreLogic’s second-quarter revenue increased to $349.4 million, which was also up 0.4% from 2Q13. The company said that the increase was “despite an estimated 50% contraction in U.S. mortgage volumes.”
The company has adjusted its earnings forecast accordingly. “The impact of lower volumes of originations, as well as continuing headwinds in the U.S. housing market, and expected reductions in discretionary client spending is reflected in the following updated 2014 guidance: revenues; adjusted EBITDA and adjusted EPS of $1.33 to $1.37 billion, $335 to $360 million, and $1.25 to $1.40 per share, respectively,” the company said.
Revenue from the company’s data and analytics division was up 14% in the second quarter, “fueled by growth in insurance, spatial solutions, and international and core property revenues,” which the company said “more than offset” the impact of lower mortgage volumes, declines in specialty credit and multifamily tenant screening revenues and the exit of certain non-core product lines.
The company reported an operating income from continuing operations of $42.1 million, which was an 11% increase prior-year levels and a 208% increase from the first quarter of 2014.
“CoreLogic delivered strong operating results in the second quarter despite the continuing contraction in U.S. mortgage volumes,” said Anand Nallathambi, Corelogic’s president and CEO.
“We continued to scale and grow our data and analytics and technology and processing solutions segments in line with our strategic business plan and we also invested in areas of strategic growth and operational excellence which we believe will provide sustainable, long-term value creation for our stakeholders," Nallathambi continued.
In an effort to reduce its debt, the company repaid approximately $51 million in term loan and revolving debt. The company also repurchased 848,779 of its common shares for a total of $25.2 million during the second quarter. Through the first six months of 2014, the company has repurchased approximately 1.1 million of its common shares.
“We grew revenues and delivered strong margins and free cash flow in the second quarter. We also progressed our major operational initiatives, exceeded our cost reduction targets, reduced our debt and repurchased close to one million of our common shares,” added Frank Martell, CoreLogic’s COO and CFO.
“Over the balance of 2014, we will remain focused on progressing our imperatives of growing our D&A segment to over 50% of our total revenues and ensuring that our TPS operations outperform their respective markets and are well-positioned to capitalize on a rebound in U.S. mortgage volumes from current trough levels.”