CoreLogic’s strategic acquisition decisions in 2016 paid off, as the company observes a 24% surge in profit in its latest first-quarter financial earnings report.
“CoreLogic is off to a strong start in 2016. Over the first three months of the year, we delivered significant top line growth and record free cash flow,” said Anand Nallathambi, president and CEO of CoreLogic.
But it wasn’t the company’s loan originations segment that led the growth, which posted an estimated 10% decline.
CoreLogic has recently strongly focused its efforts on growing its Valuation Solutions Group, resulting in a huge boost to its first-quarter earnings.
The company launched the VSG in September 2015, with the primary focus of providing insights into the valuation of residential properties for underwriting, risk management and opportunity generation.
The company’s recent acquisitions of LandSafe, FNC and RELS all fall under this umbrella. “The combination of LAS, RELS and FNC, together with CoreLogic’s existing property intelligence assets, provide the foundational elements of a scaled, integrated solution provider powered by a broad suite of fulfillment, platform, data and analytics capabilities and assets,” the company said in it’s earnings release.
The most recent acquisition, FNC, became official Wednesday as well, after first announcing its plans to acquire it in December 2015. While originally disclosing that the acquisition would cost $475 million, the earnings release revealed that it only cost the company $400 million.
FNC is a provider of real estate collateral information technology and solutions that automate property appraisal ordering, tracking, documentation and review for lender compliance with government regulations.
FNC marked CoreLogic’s second substantial announced acquisition in the field of property valuation in 2015. Earlier in the, CoreLogic purchased LandSafe Appraisal Services, an appraisal management company, from Bank of America for $122 million.
The third, and latest, acquisition from CoreLogic was in January, when it purchased the rest of RELS from Wells Fargo.
Prior to the acquisition, RELS operated under the joint ownership of CoreLogic and Wells Fargo, with CoreLogic previously owning 50.1% of the company and Well Fargo owning the remaining 49.9%. Under the terms of the agreement, CoreLogic will pay $65 million to Wells Fargo for its ownership interest in RELS.
The purchase price for LAS, RELS and FNC aggregated approximately $587 million, and the company expects to derive approximately $42 million in cash tax benefits on a net present value basis associated with the acquisitions, it said in the earnings release.
“Operationally we are continuing to execute strongly against our strategic and tactical business plans. Successfully closing the FNC transaction represents another key milestone in the build out of the VSG which we believe offers all of our stakeholders a unique value catalyst and an opportunity for strategic growth and leadership in a highly-fragmented and challenged market space,” added Frank Martell, chief operating officer of CoreLogic.
“We are also continuing to reap the benefits of our ongoing commitment to driving cost productivity, efficiency and free cash flow. Our high sustainable cash flow conversion rates allow us to target a significant level of share repurchases over the balance of 2016," he said.
