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CoreLogic Inc (NYSE:CLGX)
Q2 2020 Earnings Call
Jul 23, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the CoreLogic Second Quarter 2020 Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Dan Smith, Investor Relations. Please go ahead, sir.

Dan L. Smith -- Investor Relations

Thank you. Good morning. Welcome to our investor presentation and conference call where we present our financial results for the second quarter of 2020. Speaking today will be CoreLogic's President and CEO, Frank Martell; and CFO, Jim Balas. Before we begin, let me make a few important points. First, we've posted our slide presentation, which includes additional details on our financial results 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 expected business and operational plans, performance outlook and 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 the subsequent 10-Qs. Our forward-looking statements are based on information currently available to us, and we do not intend and undertake no duty to update these statements for any reason. Additionally, today's presentation contains financial measures that are non-GAAP financial measures. A reconciliation of these non-GAAP measures to their GAAP equivalents is included in the appendix to today's presentation. Unless specifically identified, comparisons to the second quarter financial results to prior periods should be understood on a year-over-year basis, that is in reference to the second quarter of 2019. [Operator Instructions] Thanks.

And now let me introduce our President and CEO, Frank Martell.

Frank Martell -- President and Chief Executive Officer

Thank you, Dan, and good morning, everyone. Thank you for joining us today for CoreLogic's Second Quarter 2020 Earnings Call. Today, I will outline the major operating and financial highlights for our strong second quarter, how we're navigating the impacts of the COVID-19 pandemic, our planned divestiture of reseller businesses, the 50% increase in our quarterly dividend and finally, our time line for returning $1 billion to our shareholders in the near term through our share repurchase program. Jim will follow me and provide detail on our second quarter financial results and discuss our third quarter and full year 2020 financial guidance. I will then finish up with a few comments regarding shareholder value creation and the unsolicited takeover bid we recently received before we wrap up with a Q&A session.

Before I begin, I want to take just a moment to congratulate our 5,000-plus employees and thank our clients and our shareholders as we celebrate CoreLogic's 10th anniversary as a publicly traded company. Together, over the past decade, we have transformed CoreLogic into a clear market leader in residential property-related data, analytics and platforms that power the housing finance and insurance markets in North America, Australia and New Zealand. Over the past 10 years, on an annual compounded basis, we grew revenue 6%; adjusted EBITDA, 10%; adjusted earnings per share, 21%; and adjusted EBITDA margin of 900 basis points. In the process, we returned over $1.5 billion to our shareholders. Turning to our second quarter and first half financial performance. CoreLogic delivered outstanding operating and financial results. Despite the unprecedented challenges presented by the COVID-19 pandemic, our performance stands as a clear confirmation that our company is entering its second decade with all of the fundamental building blocks in place to unleash a period of strong revenue and margin growth which should, in turn, drive superior shareholder value creation. Over the first half of 2020, total company revenues of $921 million were up 14%, normalizing for COVID-19 impacts and the AMC transformation and exit of noncore technology units, which were largely completed over the first three quarters of last year.

Organic growth climbed from a little over 2% in the first quarter to 5% in Q2, benefiting from new and/or enhanced solutions, pricing and share gains. We secured four mega wins and other significant share gains that should propel future organic growth upside in the second half of the year and beyond. Adjusted EBITDA of $289 million was up 25% for the first half, and adjusted EBITDA margins at 31.3%, up approximately 500 basis points. We also returned over $40 million to our shareholders in the forms of dividends and share repurchases and reduced our covenant debt leverage significantly. Over the past five months, our team successfully navigated through the profound operating changes necessary to protect the health and welfare of our people and, at the same time, deliver exceptional performance for our clients. Against this challenging backdrop, we delivered outstanding revenue and profit growth, record free cash flow and returned substantial capital to our shareholders as well as significantly reduced our debt. Jim will do a deeper dive on the second quarter a bit later, but here are just a few highlights that we believe should begin to drive multiple expansion for CoreLogic shares. First, regarding our top line, we delivered strong growth and favorable revenue mix.

Revenues were up 15%, normalizing for the factors I cited earlier. Organic growth was 5%, and we secured two mega wins in insurance and spatial solutions, including a very significant strategic win of a top five U.S. insurance carrier for CoreLogic's next-generation integrated insurance solution. These mega wins and other share gains will help us to continue to increase organic growth over the back half of this year and beyond. Our core mortgage revenues and profitability continue to expand rapidly, paced by strong share gains as well as market volumes. Our mortgage solutions are essential to the operation of the U.S. housing finance market, with seven out of every 10 mortgages underwritten in the U.S. using one or more of our data-driven solutions. Our profitability and margins stair-stepped higher, fueled by operating leverage and cost productivity. Operating income and net income from continuing operations were up $76 million and $65 million, respectively. The benefit of operating leverage, favorable mix and productivity allowed us to lower our operating costs by 3% in absolute terms while delivering significantly higher revenues. Our adjusted EBITDA of $158 million was up 18%, and adjusted EBITDA margins were up 400 basis points to 33% for the quarter. Finally, adjusted EPS for the quarter was $1.02, which was up 29%. Last but certainly not least, we continue to use our considerable cash generation to power capital return to our shareholders and reduce debt levels.

Trailing 12-month free cash flow totaled $393 million or 71% of adjusted EBITDA. In Q2, we paid down $101 million of debt, lowering covenant leverage below 3% or three times. We also returned $24 million to our shareholders. We have been able to deliver free cash flow generation rates well above 50% adjusted EBITDA over the past decade in all market conditions. The durability of our cash-generative model underpins our announcement today of a 50% increase in our quarterly dividend, from $0.22 to $0.33 per share. In addition, we announced today our intention to repurchase at least $500 million of our shares in 2020, $300 million in 2021 and the remaining $200 million of our current $1 billion share repurchase authorization no later than the end of 2022. This repurchase program is expected to reduce our share count by more than 15% and drive more than a 10% accretion in 2021. Our long-term commitment to consistent and significant capital return remains a strategic imperative for our company. Now as strong as our first half was, based on our accelerating revenue growth trends, competitive wins and share gains as well as expanded profitability that I just discussed, we're looking ahead to an even stronger second half of the year.

Jim will discuss our guidance ranges for the third quarter and our updated view of 2020 full year shortly. Looking beyond this year, in terms of 2021 specifically, we have secured approximately 60% of our assumed organic revenue growth target of 5%, secured by contract wins, including four mega wins so far this year. In addition, 2020 financial impacts attributable to COVID-19, $40 million to $45 million, are expected to largely recover in 2021, and we expect the benefit of the adoption of our next-generation integrated insurance solution and the national expansion of our OneHome and HomeVisit solutions to further benefit 2021. Further and importantly, approximately 95% of our revenues are recurring in nature, a foundational hallmark of a must-have vertical information service provider. Our 2020 operational financial performance, contracted wins and share gains as well as current market conditions and our internal business plans give us high confidence in achieving our 2021 and longer-term targets.

As we look to 2021 and beyond, we are also strategically divesting our lower-margin reseller businesses, which provide credit and borrower verification and rental tenant screening solutions. These businesses generated revenues aggregating approximately $340 million on a trailing 12-month basis as of June 30, 2020. While these businesses are market leaders, they are volume sensitive and do not possess growth and margin characteristics in line with our strategic plan and long-term financial targets. The divestiture of these businesses is expected to increase EBITDA margins by approximately 350 basis points to 35% on a pro forma basis for 2020 and also raise the share of subscription and longer-term revenues to greater than 50% of CoreLogic's total revenues. Approval to affect these divestitures was delegated to management by our Board early this year in conjunction with our ongoing strategic planning efforts. Advisers are now retained to conduct these sale processes, which will set to commence early in the third quarter. I want to close by thanking our employees, clients and shareholders for their continued support.

As we celebrate our 10th anniversary as a public company, CoreLogic has emerged as an integrated, innovative and data-driven strategic partner for virtually every lender and thousands of other participants that collectively comprise the housing finance and insurance landscape. Our accelerating revenue growth and financial performance demonstrate our ability to capitalize on our market-leading share positions, unmatched data and client platforms, which collectively connect the global housing economy and help millions of people find, buy and protect the homes they love.

I will now turn the call back over to Jim.

Jim Balas -- Chief Financial Officer

Thanks, Frank, and good morning, everyone. Today, I'm going to discuss our second quarter 2020 financial results and provide updated views on capital structure and financial guidance. As Frank mentioned, CoreLogic delivered strong operating and financial performance in the second quarter of 2020, while delivering on our client commitments and providing for the ongoing health and safety of our employees amid the COVID-19 crisis. Financial highlights for the quarter included: first, strong total revenue growth of 4%, which after adjusting for the 2019 effects of business exits and COVID-19 impact, was higher by approximately 15%. Second, continued momentum on revenue growth as strong market share gains across both segments contribute to an organic growth rate of 5%. In addition, we added major client multiyear wins during the quarter which are expected to benefit second half 2020 revenues as well as our outlook for 2021 and beyond. Third, significant adjusted EBITDA margin expansion of more than 400 basis points, driven by growth, favorable business mix and productivity gains.

Fourth, the generation of $393 million in free cash flow. This represents a conversion rate of 71% of our adjusted EBITDA on a trailing 12-month basis. And finally, approximately $24 million in capital return to shareholders and debt reduction of $101 million. Second quarter revenues totaled $477 million, up $18 million or 4%, driven by growth in core mortgage and insurance and spatial. As noted in our press release, second quarter 2019 revenues included $28 million attributable to noncore default technology units sold and the AMC transformation, which have no 2020 counterpart. Also, as we noted in our press release, we experienced impacts related to the COVID-19 pandemic of approximately $15 million across both segments. Revenues were up 15%, excluding these discrete items. Also during the quarter, we secured a number of new multiyear client wins, including significant contracts in insurance, geospatial and the public sector vertical that will benefit our future results. UWS revenues totaled $305 million, up $26 million or 9%, driven by higher mortgage unit volumes and organic growth fueled by market share gains in both flood and property tax solutions and growth in our valuation platforms.

UWS second quarter 2019 revenues included $28 million related to the transformational initiatives I mentioned earlier, while UWS segment-related COVID impacts were approximately $6 million and largely independent from mortgage-related lines of business. UWS revenues were up 24%, excluding these discrete items. In property tax solutions, revenue growth of more than 35% benefited from strong origination volumes and market share gains. As we look into the second half of 2020, our significant competitive takeaways in tax announced earlier this year give us high confidence that we will generate strong growth in the balance of 2020 and beyond. In credit reporting, mortgage credit revenues grew by approximately 30%, while auto and alternative credit volumes fell on COVID-19-related contraction. PIRM revenues totaled $177 million compared to $184 million in the prior year. 2020 second quarter PIRM revenues were unfavorably impacted by approximately $9 million of COVID-19-related impacts, mainly in our international and housing activity businesses within property insights and project-related insurance and spatial revenues. Excluding COVID-19 impacts and FX, PIRM revenues for insurance and spatial and property insights were both higher.

Looking ahead, our recent mega wins in PIRM, including a strategic win of a top five U.S. insurance carrier, will support segment growth and momentum for the remainder of 2020 and beyond. Operating income from continuing operations totaled $91 million for the second quarter, up $76 million compared to the same prior year period. Higher operating income was principally attributable to revenue growth, operating leverage, improved business mix and cost productivity. Second quarter net income from continuing operations totaled $59 million compared with a $6 million loss in 2019. Diluted EPS from continuing operations totaled $0.73, an increase of $0.80 over the same prior year period. Adjusted EPS totaled $1.02 compared with $0.79 in 2019, an increase of 29%. These increases were due to the company's strong operating performance discussed previously. Adjusted EBITDA totaled $158 million, up 18% compared to $134 million in the same prior year period. Adjusted EBITDA margin was 33%, an increase of 400 basis points. The increase in adjusted EBITDA and margin was principally attributable to revenue growth, improved business mix and the benefits of ongoing cost productivity programs.

UWS adjusted EBITDA was $114 million compared to $89 million for the same prior year period, reflecting operating leverage benefits driven by higher revenues, favorable revenue mix and continued productivity gains. UWS adjusted EBITDA margins grew by approximately 600 basis points to 37%. PIRM adjusted EBITDA totaled $56 million, up from $53 million in the prior year. Higher PIRM adjusted EBITDA and margins were driven by growth in insurance and spatial and international as well as the benefit of lower costs, which offset lower tenant screening volumes and the impacts of COVID-19 and currency translation. PIRM adjusted EBITDA margins totaled 32%, an increase of approximately 300 basis points. Finally, we generated strong levels of free cash flow. For the 12 months ending June 30, 2020, free cash flow totaled $393 million, a 71% conversion rate of last 12 months' adjusted EBITDA. In terms of capital return, we paid debt of more than $100 million and, with our growing earnings profile, we lowered our covenant debt leverage to 2.8 times. Further, we repurchased 150,000 shares and, combined with our quarterly dividend distribution, we returned approximately $24 million in capital to our shareholders in the second quarter.

As Frank mentioned, earlier this week, the Board approved a 50% increase in our quarterly cash dividend to $0.33 per share, to be paid starting in September 2020. This increase represents approximately $105 million of annual capital return. Further, we continue to maintain flexibility to repurchase shares while maintaining a prudent leverage profile. As we have discussed, we anticipate increasing the dividend further over time as our financial results grow. Finally, in early July, the Board of Directors authorized the repurchase of $1 billion of our common shares. Given the strength of our earnings profile and increasing strong cash flow generation, we expect to repurchase at least $500 million of shares in the remainder of 2020, $300 million in 2021 and the remaining $200 million in 2022. Regarding our financial guidance, we have revised our full year 2020 guidance as follows: we are now expecting revenues of $1.86 billion to $1.895 billion; adjusted EBITDA of $580 million to $600 million; and adjusted EPS of $3.60 to $3.75 per share. These ranges include COVID-19 related impacts on revenue and adjusted EBITDA of approximately $40 million to $45 million each. In addition, our revised 2020 guidance ranges continue to reflect that U.S. mortgage unit volumes will increase by approximately 25% over 2019 levels.

It should be noted that our increased full year financial guidance implies a continued acceleration in second half revenue and adjusted EBITDA growth relative to our first half results. With regard to the third quarter of 2020, based on normal seasonality patterns and our current view of market volumes, we expect revenue to be in the range of $485 million to $515 million and adjusted EBITDA in the range of $160 million to $175 million. Longer term, we have high conviction in achieving the targets we set out for 2021 and 2022. These forecasts are supported by a high and ramping rate of contract wins in both of our operating segments and a strong and growing sales pipeline. In addition, although our forecast assume declining mortgage market unit volumes in both 2021 and 2022, the purchase market continues to grow in all major forecasts. Historically low rates, which are likely to be in place for the foreseeable future and the significant population of existing loans that are in the money and meet broad-based eligibility criteria for refinance loans, support elevated levels of refinance volumes through at least the forecast period. To summarize, the CoreLogic team delivered strong results in the second quarter, and we are well positioned to drive revenue growth and expand profitability this year and beyond. Thanks for your support.

I will now turn the call back over to Frank for some concluding thoughts before we go to Q&A.

Frank Martell -- President and Chief Executive Officer

Thanks, Jim. I want to close out our prepared remarks today with some comments on our laser focus on, and unyielding commitment to, shareholder value creation. With regard to the recent proposal received from the publicly traded Cannae Holdings and hedge fund Senator, I'd like to confirm that it came out of the blue. We learned about it for the first time from their press release on June 26. Prior to going public, at no time did Senator and Cannae attempt to discuss their interest or intentions with regard to CoreLogic with management or the Board. This hostile bid appears to be a hasty response to CoreLogic's very positively received post-market June 25 increase in our second quarter guidance. After announcing their unsolicited $65 per share proposal, Senator purchased over two million CoreLogic shares at prices as high as $68.27 per share to increase its ownership position to support its threat to call a special meeting of our shareholders to force the company's Board to accept $65 per share.

After a thorough review of the proposal and the value creation opportunities inherent in CoreLogic's strategic plan, including multiyear internal business and financial projections which were made public with the Board's response, CoreLogic's Board unanimously rejected $65 based on its determination that the proposal significantly undervalues the company. Last week, members of senior management and our Board, plus our advisors engage with principals of Senator and Cannae and their advisors to discuss value, financing and other matters bearing directly on their ability to consummate a purchase. Senator and Cannae declined to increase their proposal, which have been made based on our previous financial guidance, despite having access to our increased 2020 guidance and multiyear projections, which we have provided transparently to the public markets. We believe that our publicly announced 2020, 2021 and 2022 financial forecast and operational plans are very achievable and are supported by demonstrable facts and visible trends. Our track record on delivering on our forecast and commitments speaks for itself. Going forward, our profit margins and shareholder returns will be materially enhanced by the divestiture of our lower-margin reseller businesses as well as our $1 billion share repurchase program and 50% higher dividend.

We will provide pro forma estimates of the impacts of exiting our reseller businesses and the share repurchase program on our public forecast separately. We plan to continue to provide significant transparency into our business so that all shareholders can fully appreciate CoreLogic's substantial current and potential value creation. Cannae management, through their controlled and/or affiliated companies in the housing finance space, know well the rapidly improving dynamics underlying the residential property housing market and its bright prospects for the foreseeable future. The robustness of the housing market is widely and regularly reported in the media. To be crystal clear, however, our Board remains open to all paths to create value and would consider an offer that appropriately values the company and provides for certainty of closing. CoreLogic's Board and management team have a long and well-documented history of generating shareholder value. Over the past 10 years, we delivered transparent transparency, shareholder value, capital return programs and have consistently met our financial and operational commitments.

From our initial public listing in 2010 and prior to the Cannae-Senator bid on the 26th of June, our stock price had risen well over threefold in value, and we had returned more than $1.5 billion in capital via share repurchases and dividends. As I discussed earlier, over the past decade, the company has successfully transformed itself into an integrated data-driven strategic partner for virtually every lender and thousands of other participants that collectively comprise the housing finance and insurance landscape. We have consistently outperformed our financial targets through all mortgage cycles as well as during the current COVID-19 pandemic. Our transformed business, market leadership positions and reduced cyclicality as well as comparable revenue growth, margin profile and cash flow generation are coming in line with our information services peer group. We believe this should merit multiple expansion to peer group levels over the forecast period. We appreciate the ongoing dialogue and input that we've received from our shareholders and look forward to continued engagement. I'm going to now turn the call over to the operator for Q&A. Please keep your questions focused on our earnings and business prospects. We said all that we can say about the Senator-Cannae proposal.

Operator, please open the line for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Andrew Jeffrey with SunTrust. Please go ahead.

Andrew Jeffrey -- SunTrust -- Analyst

Good morning. Thank you for taking the question. I wonder if you could elaborate a little bit on these big wins. And I'm thinking about insurance, in particular. It will be exciting to see that revenue come into numbers in the back half of next year. Was this a competitive takeaway in insurance? And can you describe sort of the functionality and the nature of the business in a bit of detail for us?

Frank Martell -- President and Chief Executive Officer

Good morning. Yes. This is Frank. So yes, so the mega wins are with us in the tens of millions of contract value. And so just to give you some framing there. In the case of insurance, specifically, you talked about. So as you know, we have acquired full ownership of the Symbility business, which is a claims management system a couple of years ago. We owned about 1/3 of that company, and we brought the whole thing in. We combined that with our underwriting platform. So we now have an integrated end-to-end solution for the insurance carriers that we didn't have previously. We've been out in the market with that solution. We think that the solution, when you marry it up with the analytics and the data that the rest of the company provides, creates unique insight for insurance carriers. And this is the one that we talked about on the call today, really relates to the first major win. We've had others, frankly, but this is the first mega win, and it's a very important strategic opportunity for us because it really opens up the North American market and the major insurance carrier market for us, particularly in the claims space. So that's what that reference is about.

Andrew Jeffrey -- SunTrust -- Analyst

Okay. Helpful. Thank you. And can you quantify, Frank, the market share gains you think that CoreLogic has enjoyed in this mortgage cycle? I know that's always a big part of your growth. I wonder just how we can think about the contribution of share gains specifically to revenue growth.

Frank Martell -- President and Chief Executive Officer

Yes. It's about 50% of the revenue growth rate, Andrew. And I think the important thing I think the most important thing because there's been some questions, I think, put into the market about the forecast and a lot of stuff about mortgage, frankly speaking. So this goes beyond mortgage. We've taken a lot of share across the entire business the last 12 months. I think we have 60% or so of the roughly $100 million that's embedded in the forecast for 2021 for organic growth. I think that's great visibility given the fact that we're midyear, given the fact that COVID. So I think it just goes to the strong underlying momentum across both PIRM and UWS, frankly. And look, I think that's because of the market leadership positions we have, some of this relates to bundling solutions together. Some of it relates to people looking for safe pair of hands. And some of it looks like goes to the quality of our solutions and our services. I mean that's we're by far and away the clear market leader in the segments that we operate in and collectively as well in mortgage finance. So this that's we represent a safe pair of hands in a very uncertain time for a lot of clients. So that's collectively helped us to secure the 60% of the organic growth profile for next year. And so we feel good about that. And then we have, to a certain degree, pricing, obviously, and some product and feature enhancements and that type of thing that accrue additional revenue growth opportunities. But the good news is, outside the mega wins, it's pretty broad-based, and it's contractually locked in.

Andrew Jeffrey -- SunTrust -- Analyst

All right, appreciate the color.

Operator

Our next question comes from Darrin Peller with Wolfe Research. Please go ahead. Alright. Hey, guys, thanks. I want to hone in a little more on the organic growth profile. I mean it's been a number of quarters where it's been low single digits, so you guys are calling for 5% now. And I understand the insurance wins. So I guess what would be great is if you can give us more of a breakdown on the organic growth expectations on your data analytics businesses in North America as well as internationally, which has been kind of, I think, relatively flat in the last several quarters. But insurance does seem like it's got a real life behind it now and a lot of new clients and some of these new products, given the mergers you've done and the assets you've put together. So if we think about it more from a building blocks up in terms of assets, what are the growth rates you expect of each of these? And then I guess on the mortgage-sensitive parts of the business, again, if we pulled out mortgage cyclicality, what would be the I guess, back to the question before, what would be the growth rate of that business on a mortgage-neutral environment?

Frank Martell -- President and Chief Executive Officer

Yes. So look, Darrin, just in terms of nonmortgage, a couple of things. And as Jim alluded to, that's been ironically the segment that's been most impacted by COVID-19 in the short run. So if you look at that segment, the two things that really stand out are the international business where essentially, as you know, Australia, New Zealand and the U.K. have been locked down for most of the second quarter. So obviously, that's going to have a big impact. And obviously, that's going to release. So if you look at the organic growth profile going into 2021, I don't expect that those countries will be locked down in 2021 like they were locked down in 2020. So as Jim provided, those numbers are significant. So that's other than that, the international piece was growing very nicely for us. We have tremendous market shares in those areas, and I would expect those to continue to grow in the upper single digits. In line with historical trends, I think there's no reason to assume that that's not the case.

We also have major wins there recently. For example, we had a well over $50 million contract in Australia, which is somewhat of a renewal and somewhat of an expansion of that contract value. So a lot of good things are going on under the surface. But at the moment, the reality is, look, we're not alone. I mean this is we've had spectacular results in the second quarter and this is just one rough area that I think you're going to see from COVID. The other area that COVID impacted, obviously, was the tenant screening business, which we've announced that is will be disposed of. That business has declined. As you know, it's tenant screening, so it involves turnover of tenants in multifamily properties. Obviously, not a lot of people are moving these days, so the volumes there are down. So those are the two kind of COVID areas. We have had strong growth in the second quarter, about 7% in insurance if you exclude the excluding the mega win and COVID. So from that perspective, there is good growth there, good momentum. And the mega wins in insurance that I referred to in spatial, those are second half and 2021 benefits.

So they're not in the first half. So the fact that we've accelerated the overall organic growth rate to 5%, which I think is from a market perspective and from the sell-side perspective, this has been an area of focus. Obviously, we've accelerated to 5%, 5% in line with our kind of our second half and 2021 outlook. So I think it gives you some comfort level that we can move to that level, and then barring something with COVID or something else, it's an anomaly there. I think in terms of the other thing I would call out in PIRM is we have fantastic momentum in our realtor and marketing solutions area. We've had a couple of public announcements around the launch of what is very exciting, kind of a digital, visual-driven suite of services around marketing for realtors. We have a platform that serves 850,000 realtors in the U.S. That's a huge market share. And we're augmenting their ability to compete in a more digital world through some of these services. Those are being launched now.

We have a couple of MLSs and a bunch of agents using them now. That's going to roll out nationally over the next kind of six to 12 months. So that's going to give you a lot of momentum in that business. The fact of the matter is, in the short run, that business, as listings dropped, obviously, because of the shock wave of COVID, listings were withdrawn, a lot of them temporarily and now are coming back on the market. You look at home sales, I think the realtor association came out yesterday actually with a figure of June. June sales were up 20%, a little over 20%. So the purchase market actually in all of the forecast is showing an improvement over the forecast period. And I think although overall purchase activity is down a little bit, obviously, because you really lost the second quarter for some transactions, is very strong and very solid. If it wasn't for the lack of supply, it would be even stronger. So I think and obviously, there's building going on.

So we feel pretty good about the realtor side of the business, especially as we get out in the back half of the year and COVID kind of drops off. And then I think on the property intelligence side with data licensing, that's a long-term contractual so the growth rates will be a little bit more static in the lower single digits, but a steady high-margin base for the other businesses. And I think once you see that when we pull out the tenant screening business, you're going to see an even more improved profile of that PIRM segment. So I'm feeling pretty good about the vast majority of the segment and the acceleration. And look, I think we've seen it the last couple of quarters, and I think you're going to see it accelerate when the big share gains kick in and also the other share gains kick in as well as we get some relief from COVID.

Darrin Peller -- Wolfe Research -- Analyst

All right. That's helpful. I mean just when I think about the when we think about your strategy on a bigger picture basis of mortgage sensitivity versus not, you obviously are exiting a couple of businesses on the credit side and the tenant screening side and they're not quite mortgage, but they're transactional, at least on the tenant screening side. The credit side is. We've gone through a number of years where you've gone you had suggested you were moving away from being mortgage sensitive than we had seen further push into the valuations on the appraisal side brought that back up again. And now it seems like it's going to you're going back to 50-50. Is that your goal, is to keep that going in that direction so that mortgage sensitivity is basically balanced? Or is it going to come down as a percentage of the mix to potentially support a better less cyclical multiple?

Frank Martell -- President and Chief Executive Officer

Yes. And I think, Darrin, definitely. As you know, I mean, 10 years ago, the company was 90%-plus mortgage in default. So we've radically reshaped the company. Really, what we have right now is a company that sits on top of an integrated data and technology stack. So we have that's one of the reasons why the margins have come up. So we're able to fuel, with our content, different solutions in different verticals. That's really what's been underpinning the diversification efforts. You can't do everything operationally, forget about the public markets, but because we've transformed in the public markets and had a tremendous increase in our price our share price. But having said that, there's an operational amount that any organization can tolerate to a reasonable degree. We had talked about things like the divestitures as part of our planning cycle for 2020. We had planned to do this actually a little bit earlier, but because of COVID, we had to kind of push back.

And so that's why we're kind of doing it now. But look, I think that the goal is still the same, is to push the nonmortgage piece of the company and grow the nonmortgage piece of the company upward better than 50%. But I would say, importantly, too, what we're signaling with the divestiture is within our mortgage. Mortgage provides the fuel and cash flow to give $1 billion of share repurchase in the next kind of tow and half years is quite a significant amount. If you look at dividends and the capital return side of it, we've done $1.5 billion so far. We're talking about another roughly between dividends and share repurchase, another $1.3 billion. So that's almost $2.8 billion of capital return in 12.5 years. I mean that's pretty phenomenal. And I think that's somewhat supported by the mortgage related, which are huge margins are highly automated. What we have left after credit is sold is essentially platforms that are highly automated, that have huge market shares, and so they're going to be high margin in any really any foreseeable cycle. So I think we've got a what we have in mortgage is a lot less volatile.

Essentially, what we're doing, Darrin, is that if you look at that overall revenue in mortgage, about half of it's modeled or long term. So it doesn't move with daily volumes that much. The other half, which is more sensitive, we're basically taking out about 50% to 60% of that daily sensitivity. So we're down to a relatively small amount, and we'll provide more visibility into that sensitivity. But we were at $12 million of EBITDA and $25 million of revenue. That's going to drop fairly significantly with this divestiture. So mortgage has become a lot less of a swing factor for us. And we'll continue to build the platform and content-driven portion of the business. That valuation business you mentioned, the platform business, is a fantastic business. It's strong growth, and it's got high margins. That is an awesome business, and we want to continue to grow businesses like that.

Darrin Peller -- Wolfe Research -- Analyst

All right. Thanks a lot, guys.

Operator

Our next question comes from Kevin Kaczmarek with Zelman & Associates. Please go ahead.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Hey, guys, thanks for taking my questions. I guess regarding the divestiture of the credit business. I mean yes, sure, it optically helps margins given the COGS associated with it. But I guess, how much is this driven by the pricing pressure we've seen? And wouldn't this make it a tougher time to sell that despite the elevated mortgage volumes?

Frank Martell -- President and Chief Executive Officer

No. Look, I think, Kevin, obviously, you know that credit business, so we have a strong market share position. The business, most of the revenue is underpinned by the requirement for tri-merge reports. So in terms of the revenue stream, it's kind of secured by regulatory fiat. So from that standpoint, it's got a revenue projection. We are growing significantly this year. So we're not getting rid of it because it's not a growth play per se for us to change the trend line, but it is more volatile. And the challenge is, we've looked at various solutions to build value around the reseller model. But the vast majority of the cost remains the bureau file cost. And it's very difficult to add incremental value to affect pricing and margins in that business. So but it does provide a steady cash flow, it does provide a solid business proposition. I think it's very marketable and sellable. And I think there'll be a lot of interest in that business because of those characteristics I just mentioned.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Okay. And can you remind us how the data from those credit reports informs any other parts of your business or risk models that you have? And also, how do you think about the valuation of that business?

Frank Martell -- President and Chief Executive Officer

Yes. Look, I think that the only impact, quite honestly, as I mentioned earlier, our company is very integrated. So we have an integrated technology stack, an integrated data operation. Because of the nature of the credit business, there's not a lot of data that exhausts from that business that comes in. So it's not really we don't lose the data per se. It really provided scale and cash flow over the years. And also, frankly, our customers some of our customers is convenient to do bundled solutions with us so they buy everything because we touched so much of the mortgage finance market. So but I think there's many other credible providers there. But it's difficult. It's really very difficult to see a lot of synergy between that business and the balance of the business, and we've never been able to really extract. But it's just not the nature of that business, quite honestly.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Okay. And in terms of the valuation, are you thinking about that? Or do you have a target or anything that you're kind of bringing to other people?

Frank Martell -- President and Chief Executive Officer

No. As I mentioned on the call, transparently speaking, if you look at pro forma basis, the two the tenant screening, which is small, the credit business is the bigger piece by far. We'll see how we go there, but those two are $340 million, if you look at kind of a trailing 12 months. So I think you can do the math on a reseller business, but we're hopeful that it will the proceeds will be significant. But I would say that we're not counting on it. That will be a benefit to our liquidity planning. We have strong liquidity without assuming any proceeds. Obviously, we would like significant proceeds. We expect significant proceeds, but that would be a benefit to help us delever even further. I think it's great that we move from kind of 3.5 turns to 2.8 turns in a very short order while returning a lot of capital. So we have the ability to do a lot on the capital allocation side.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

All right, thanks a lot.

Operator

Our next question comes from Stephen Sheldon with William Blair. Please go ahead.

Stephen Sheldon -- William Blair -- Analyst

Hi, thanks. First on the planned divestitures. I wanted to confirm that the 2020 through 2022 guidance still has a contribution from these businesses included. And with that context, kind of following up on the last question, can you also give kind of the approximate adjusted EBITDA contribution from those on a trailing basis?

Jim Balas -- Chief Financial Officer

Steve, it's Jim. On the divestitures, the margin profile on a contribution basis will be upper teens. And they are in the forecast period that we provided through 2022.

Stephen Sheldon -- William Blair -- Analyst

Okay. And then I guess within insurance and spatial, can you talk some about the pipeline there for additional larger client wins? And what type of contribution you would need from additional client wins beyond what you've announced for organic revenue growth to accelerate into the mid or high single digits?

Jim Balas -- Chief Financial Officer

Yes. We haven't assumed anything beyond the initial one, at least through 2021. So we've only factored in what we know today.

Stephen Sheldon -- William Blair -- Analyst

Thank you.

Operator

[Operator Instructions] Our next question comes from John Campbell with Stephens Inc. Please go ahead.

John Campbell -- Stephens Inc -- Analyst

Hey, guys, good morning.

Frank Martell -- President and Chief Executive Officer

Good morning.

John Campbell -- Stephens Inc -- Analyst

Yes. On property tax, another really good quarter there for you guys. I know there's a variable piece of that revenue stream that obviously had some tailwinds this quarter. But Jim or maybe Frank, if you guys can maybe unpack kind of the underlying recurring rev and property tax versus, I guess, the in period left from the variable piece. And then if you guys can maybe remind us or help provide a little more color on the new wins. And just roughly, how much of that helps in the back half of this year and then going into next year?

Frank Martell -- President and Chief Executive Officer

John, this is Frank. So yes. So look, I think, as you know, that business really has kind of two characteristics to it. One is about 70% of it is what we call life of loan, which essentially you get paid upfront and you amortize the revenue over kind of a 5- to 7-year life. So from that perspective, it's a model revenue stream. The balance is really what's called periodic recognition, which is you do it month to month to month. These are long-term contracts. We provide this service we pay we make payments for really basically every major servicer in the country to 22,000 taxing jurisdictions. So incredibly sticky, incredibly strong business from that perspective. So you've got really, I'd say, primarily a modeled revenue recognition in that business. One of the mega wins relates to that business. So to your point about growth, we're going to get a turbo boost in that business as we look out in the second half and into 2021, especially. So you're going to see a whopper improvement in that business.

I'm not sure whopper is a financial term, but it will be a very strong improvement on an already strong situation. So that's a very important business. It kind of sits alongside flood because again, flood has a very similar longitudinal revenue stream. It doesn't have the modeled characteristic because of the some of the underlying it's a less intensive longer-term support model. But by and large, those two businesses both create a longitudinal relationship with the clients, which help us to actually cross-sell as well over time. But we have tremendous, terrific momentum. And also, you may recall from past calls, we have digitized and automated that business. So you're going to see even better margin characteristics as we go forward. Because the and frankly, better client service on an already strong kind of gold standard service model because of the automation that is already rolling out to our clients as we speak. So terrific business, terrific momentum.

John Campbell -- Stephens Inc -- Analyst

Okay. And that's helpful. And then you guys obviously historically haven't really guided margin by segment. But just thinking about this out to 2022, PIRM, it seems like if you look at some of the comps in the space, like it seems like there's a lot of upside to margin there. With UWS, you've got some divestures. You've got obviously, property tax is going to help. But just broadly speaking, in both segments, any kind of idea where you can take the margin in each one of those and you can just talk to hundreds of bps? Or if there's like a margin target you're looking for, for each segment?

Frank Martell -- President and Chief Executive Officer

Yes. Look, I think, first of all, I think if you look at the second quarter and first half, I think you've got UWS segment margins in the upper 30s at the moment. And then you got PIRM, which actually is up quite a bit in the first half in kind of the lower to mid-30s. So and I think, obviously, what we've done in the forecast for the total company before the impact of the divestitures is we've gone from kind of a 30% to 31% margin this year. And I think we're obviously, first half of the year with 31% margin on upward to a 35%. So we're going to get there much quicker, but I would expect that 35% margin is kind of the baseline now or rebaseline. And I think you're going to see kind of that 50-ish basis point to maybe 100 basis point improvement, depending on how the revenue layers in. But as you know, we've been able to reduce our costs by $25 million to $30 million pretty consistently over the years.

I would expect that to continue. So that's the baseline for the margin that we're assuming. And then anything we do with the mix should help buttress that and improve that. So I think we'll move up from 35%. How that breaks out by segment, I think both segments will be kind of close to that 35% overall company target. So and look, I think that's a very strong margin for a business that has the scope that we have. Because we don't some of the other players have monopoly businesses that have huge margins that impact their margin rates. But I think at 35% and increasing, that's an extremely good starting point for us, and I think is a great foundation to build off of.

John Campbell -- Stephens Inc -- Analyst

Okay, thank you guys.

Operator

Our next question comes from Mark DeVries with Barclays. Please go ahead.

Mark DeVries -- Barclays -- Analyst

Yes, thanks. After some pretty lean years from your originator servicer clients that have them a lot more focused on expense containment, they're now seeing near-record margins on pretty strong volumes. Are you seeing any kind of increase in their appetite to invest in their business in ways that really enhance your revenue opportunities, whether that's pulling credit files earlier in the process for just investing in new data or services that they had been paying for before?

Frank Martell -- President and Chief Executive Officer

Yes. I mean look, I think they are. It was part of the outlook. If you look at the Mark, the obviously, in 2019, for example, where people were losing money on mortgages originated, I think there was a lot of cost management. There still is. I mean people still are looking at COVID and what that means medium to longer term for them. But they are definitely investing in customer experience. Everybody is trying to automate, digitize, and that's right into our wheelhouse. In addition, a lot of our revenue people don't fully understand, but a lot of our revenue relates to monitoring services versus a full outsourcing. So if you look at we do have some outsourced relationships that where we're providing a lot more significant scope. That gives us a tremendous amount of room for expansion. In addition, we've got a nice business foothold in the commercial space. I hate to raise that up because that obviously is a lot of speculation about the health of the commercial space. But when you have a small base, that allows you to grow as well. So I think there's the team has done just tremendous work there. And I think you're going to see a more expansion of that business as we go forward. And then in addition, just all the stuff we've already won, that will flow through to an increasing degree in the second half of the year and into next year.

Mark DeVries -- Barclays -- Analyst

Okay, thanks.

Operator

Our next question comes from Tommy McJoynt with KBW. Please go ahead.

Tommy McJoynt -- KBW -- Analyst

Hey, good morning, guys. Thanks for taking my question. I just want to confirm the comments on meeting the $1 billion buybacks and continuing to increase the quarterly dividend is not dependent on this divestiture happening at any certain time?

Frank Martell -- President and Chief Executive Officer

Yes. Tommy, yes. So what I refer to, so the capital turn that Jim talked about, we're going to do through cash flow. And I think that from that standpoint and we have obviously a revolving facility and bank line that is $750 million. So we if you do the math, the cash flow has plenty to support plus if we need to tap the line. But we expect to do this at reasonable leverages even at the $1 billion. It's not a high leverage profile for us, which is great news. And then as I said earlier, if we get whatever proceeds we'll get, we'll delever the company. So it's reasonable to assume that we could end up down to kind of where we are now when all is said and done in the forecast period even with the $1 billion plus the the dividend, we put that into place. Obviously, we've kind of rerated upward from a stock price perspective. So we're catching up with that on a dividend perspective. And also, if you look at it, it's a good validation of the strength of the cash flow and the durability of the cash flow.

And then obviously, we expect that the profitability to increase over the forecast period. I just don't want to mention a little bit on that before we close. But from that perspective, I think the dividend should grow even beyond where it is as of today. And then just one other comment, Tommy. On the mortgage forecast, a lot has been talked about mortgage forecast and all that kind of stuff. As you all know, the there's a lot of different estimates of mortgage volumes. They vary greatly depending on who produces them. We I would call your attention, there's a slide in our second quarter financial supplement that talks about how, in very precise terms, what we've assumed versus the other major players. So I think you're going to see that our forecast is really right in the range of all the other forecasts. It's not crazy by any stretch. It's very reasonable. I think we see as I mentioned, we see the majority of the mortgage transactions. We have great visibility in all the major players. So I think that our mortgage forecasts are pretty much on.

The only variation in the 2021 forecast of the major forecast is one of the major forecasters has a much higher interest rate assumption than the others do, which is driving a disconnect in their refi level versus the others, everybody else. So if you normalize for that, everybody is in the same ZIP code. So I think if you look at the mortgage forecast, we don't see that as being a major impediment to hitting our forecast in 2021 and '22. So I think the company's cash flow-generative model is only getting stronger, and it's supported by higher margins and better mix and more automation. So I think that all helps us to drive really unparalleled levels of shareholder capital return. And that's always been a hallmark of this company in the 10 years that we've been a publicly traded company and will be a hallmark of our approach.

Tommy McJoynt -- KBW -- Analyst

And then just switching on, I just recently got to the slide of the kind of what you guys considered as high recurrence. But just kind of in your own words, when you guys think about that 95% of revenue being recurring, how does obviously the cyclicality of mortgage kind of impact that?

Jim Balas -- Chief Financial Officer

Yes. Tommy, it's Jim. In terms of the recurring nature, generally, it's contracts that are a year or more that can auto renew and so forth. And the fixed portion of that is where we have a fixed and determinable price. And then the variable component would be consumption or unit-based. So it kind of splits out to that 45-50 between the two.

Tommy McJoynt -- KBW -- Analyst

Okay, got it. Thanks Jim.

Jim Balas -- Chief Financial Officer

Great.

Operator

[Operator Closing Remarks]

Duration: 64 minutes

Call participants:

Dan L. Smith -- Investor Relations

Frank Martell -- President and Chief Executive Officer

Jim Balas -- Chief Financial Officer

Andrew Jeffrey -- SunTrust -- Analyst

Darrin Peller -- Wolfe Research -- Analyst

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Stephen Sheldon -- William Blair -- Analyst

John Campbell -- Stephens Inc -- Analyst

Mark DeVries -- Barclays -- Analyst

Tommy McJoynt -- KBW -- Analyst

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