CoreLogic, Inc. (NYSE:CLGX) Q4 2019 Earnings Conference Call - Final Transcript

Feb 26, 2020 • 06:00 pm ET


CoreLogic, Inc. (NYSE:CLGX) Q4 2019 Earnings Conference Call - Final Transcript


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Frank Martell

interest and we've recently secured major new contracts with two of the top 10 US mortgage originators. These wins together with a host of other new contracts for our reimagined service model are expected to generate strong double-digit underlying AMC revenue growth with higher margins in 2020.

Our operating income and adjusted EBITDA margin significantly increased during the quarter, reflecting the benefits of favorable revenue mix and operating leverage and ongoing productivity gains. Collectively, higher revenues and favorable revenue mix, as well as cost efficiency helped us to drive adjusted EBITDA margins above 30%. This represents a margin improvement of five full percentage points over prior year. As we exit 2019, we believe we're well-positioned to drive for higher organic growth rates and profitability in 2020 and beyond.

During the fourth quarter, we accelerated free cash flow conversion rates to finish out 2019 at 52%. During 2019, we continued to follow a balanced and consistent three-pillar capital allocation model, which focuses on appropriate reinvestment in our platform solutions, human capital and infrastructure, returning significant capital to our shareholders, and finally prudent management of our debt levels in line with -- in line with long-term targets.

I'll now provide a bit of color on each of these pillars in terms of accomplishments over the past year. In 2019, our business reinvestment focused on expanding our platforms and integrated solutions offerings, transforming our collateral valuations business model, enhancing quality, service and operating efficiency, investing in cyber and information security, and finally, progressing the GCP platform migration.

With regard to capital return, we allocated about one-third of our total free cash flow generated during 2019 to share repurchases. Importantly the company's Board of Directors also approved the initiation of a dividend beginning in Q1 of 2020. This quarterly dividend level is equivalent to approximately 30% of adjusted 2019 earnings. Although we expect our primary capital return to come in the form of dividends going forward, we plan to continue to repurchase our shares on an opportunistic basis. Finally, we reduced our debt by $110 million in 2019 as part of an ongoing program to progressively align debt levels with our longer term planning targets.

The balance of my prepared remarks today will focus on our revenue mix and driving high margin organic growth. As we push for higher growth rates at higher margins, we made significant progress over the past several years building market leadership in our core solutions, which focus on delivering unique data-driven insights that helps millions of people find, buy and protect the home they love.

During 2020, we expect to continue to strengthen and grow our platforms, which connect many of the most critical activities and constituencies in the housing ecosystem. These businesses are scale market leaders, generate consistent revenue streams and strong margins and leverage our unmatched data and analytics solutions.

Over the past several years we have built and/or expanded our platform offerings, focused on marketing services, home purchase, insurances spatial and international. We're also making strong