CoreLogic Inc (CLGX) Q1 2019 Earnings Call Transcript

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CoreLogic Inc  (NYSE: CLGX)
Q1 2019 Earnings Call
April 25, 2019, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator --

Good day and welcome to the CoreLogic First Quarter 2019 Earnings Call. Today's conference is being recorded. And after today's presentation, there will be an opportunity to ask questions. (Operator Instructions)

And I would now like to turn the conference over to Dan Smith. Please go ahead.

Dan Smith -- Investor Relations Officer and Senior Vice President

Thank you and good morning. Welcome to our investor presentation and conference call where we present our financial results for the first quarter of 2019. 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 the 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 the GAAP equivalents is included in the appendix to today's presentation. Unless specifically identified, comparisons of first quarter financial results to prior periods should be understood on a year-over-year basis, that is in reference to the first quarter of 2018.

Finally, please limit yourselves to one question with a brief follow-up. We will take additional questions at the end of the call as time permits.

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

Frank Martell -- President, Chief Executive Officer and Director

Thanks, Dan, and good morning, everyone. Welcome to CoreLogic's first quarter 2019 earnings call. I'll lead off today with a recap of our first quarter operating performance and key takeaways. Jim will follow and summarize our financial results and provide guidance for the upcoming quarter. We'll wrap up the call today with a Q&A session.

The CoreLogic team is off to a very strong start in 2019 both operationally and from a financial point of view despite a double-digit contraction in U.S. mortgage loan volumes. Over the first three months of the year, we outperformed the U.S. mortgage market unit volume trends and increased adjusted EBITDA margins versus a very strong prior year comp by driving favorable revenue mix, productivity and operating leverage. We also use our solid free cash flow to reduce debt levels and reinvest back into the business.

Jim will elaborate further on cash flow conversion rates and capital allocation in a few minutes. First quarter revenues were down about 6% compared with a 10% to 15% estimated drop in overall U.S. mortgage market unit volumes. In terms of market volumes, both purchase and refinancing were down as continuing affordability pressures and a generally higher rate environment limited new loan production. In addition to reduced mortgage market activity, lower AMC revenues and the wind-down of our legacy mortgage and default technology-related platforms also impacted revenues. On the positive side, our insurance and spatial solutions businesses and valuation platform teams delivered solid growth during the quarter.

During the quarter, the company's core mortgage operations continued to outperform overall U.S. market trends led by growth in our valuation platform business and strong performances from our flood zone determination and tax payment processing units. An increasingly important driver of our market outperformance is our scale and breadth of our offerings. Integrated solutions packages, which leverage the full range of our data-driven insights and unmatched service and quality, are progressively gaining traction in the marketplace as customers seek to build strategic relationships with key supplier partners. The U.S. housing ecosystem remains the largest consumer of residential property information in the world. Our continued market leadership positions us for significant operating and financial upside, coincident with the eventual return of mortgage market unit volume growth.

Several years ago, we announced a long-term target of growing our non-U.S. mortgage volume sensitive revenues to at least 50% of total volumes. In Q1 2019, our non-mortgage unit volume sensitive solutions contributed approximately 40% of our total revenues, about 4 percentage points higher than the first quarter of last year fueled by the expansion of our insurance and international footprints. A significant driver for this first quarter increase was the successful integration of Symbility, which was acquired in December of 2018. Symbility is a leading provider of cutting edge claims processing solutions. The combination of Symbility and our existing underwriting and geospatial data and analytics capabilities as well as our property-related data assets allow CoreLogic to provide our clients in the insurance industry with new and unique insight into underwriting property and natural hazard risk coverage while actively processing claims.

CoreLogic's continuing growth into new verticals as well as our global expansion has been enabled in part by the scale and market leadership of the company's core U.S. mortgage businesses. These businesses leverage common technology and back office infrastructure as well as data repositories.

In December of 2018, we announced our intention to accelerate the transformation of our AMC operations by increasing the use of data driven analytics, further automating critical workflows and upping the utilization of our in-house staff appraiser panel. We also announced the wind-down of several non-core mortgage and default technology units. We expect to operationalize the acceleration of our AMC transformation program and wind-down the non-core units largely over the next four quarters. As communicated previously, we expect these programs will result in significant reductions in UWS revenues and to a lesser degree profits this year. Over the longer run, once implemented, our AMC transformation program is projected to result in an improved underlying organic growth trends and higher profit margins.

Adjusted EBITDA totaled $98 million for the first quarter compared to $103 million in 2018. In Q1, the flow through benefits of our past cost management programs, including more than $20 million during 2018, helped us to deliver modestly higher adjusted EBITDA margin despite the market headwinds and after covering elevated investment spending related to a number of key business initiatives. As our long-term investors know well, we have an established track record of successfully driving productivity and our push toward first quartile levels of operational excellence. We expect a lower run rate cost by at least another $20 million in 2019 by consolidating facilities, managing staffing levels, automating certain activities and other operational improvements.

In terms of the first quarter, we ramped up our migration to the Google Cloud platform or GCP. GCP migration was our largest single investment in the quarter and is expected to generate material savings in 2020. In addition to the GCP, we invested in existing and next-generation capabilities with a particular focus on data quality, structures and visualization as well as technology platforms and advanced automation techniques, which we expect will set a foundation for future growth and margin expansion.

Finally, during the quarter, we also continue to aggressively centralize operations and consolidate our real estate footprint. The programs I just highlighted as well as other planned reductions support our goal of achieving at least 30% adjusted EBITDA margins during 2020 based on a stable U.S. mortgage market and after accounting for the transformation of our valuation solutions offerings and the wind-down of our legacy mortgage and default technology platforms.

To sum it up, we're off to a strong start to 2019. We're excited about the many opportunities ahead of us to create value for our stakeholders. As market leader, we are building best-in-class solutions that provide our clients with unique insights and connect the totality of the real estate ecosystem. Our long-term focus remains on innovation, superior quality and service levels as well as profitable scale, which positions us to be a high impact strategic partner for our clients.

I want to thank all of our employees, our clients and our shareholders for their continued support as the CoreLogic team successfully executes against our vision of creating a scaled, innovative, data driven enterprise that delivers unique must-have solutions.

Thanks very much for joining us today. Jim will now discuss our financial results.

Jim Balas -- Chief Financial Officer

Thanks, Frank, and good morning, everyone. Today, I'm going to discuss our first quarter financial results and then provide an outlook for the second quarter. As Frank mentioned, CoreLogic delivered a strong operating and financial performance in the first quarter of 2019. Financial highlights included, first, continued outperformance of U.S. mortgage market trends; second, improved business mix reflecting a greater proportion of higher margin subscription technology in non-U.S. mortgage-based revenue; third, adjusted EBITDA margin expansion of approximately 20 basis points driven by favorable business mix and cost management, which more than offset lower market volumes and investment spend; and finally, $23 million in voluntary debt reductions against our term loan obligations.

First quarter revenues totaled $418 million, down 6% from 2018. The decline in revenue resulted principally from lower U.S. mortgage market activity, lower AMC volumes, and the wind-down of non-core mortgage and default technology related platforms, partially offset by 2018 acquisitions.

During the quarter, U.S. mortgage unit volumes declined by an estimated 10% to 15% on lower refinancing activity in home sales. PIRM revenues rose 1% from 2018 levels to $176 million. UWS revenues totaled $245 million, down 11% from 2018 levels. Operating income from continuing operations totaled $21 million for the first quarter compared with $44 million in 2018. The decline in operating income was driven by the impact of lower revenues partially offset by cost management benefits. The company also incurred higher levels of investments related to productivity programs, which totaled $8 million and discrete efficiency-related charges of $5 million.

First quarter net income from continuing operations totaled $2 million compared with $28 million, reflecting lower operating income levels discussed previously and modestly higher interest expense and tax provisions. Diluted EPS from continuing operations totaled $0.02 for the first quarter of 2019 compared with $0.34 in 2018. Adjusted EPS totaled $0.45 compared with $0.52 in the first quarter of 2018.

Adjusted EBITDA totaled $98 million in the first quarter compared with $103 million in the same prior-year period. The year-over-year reduction in adjusted EBITDA resulted principally from lower revenues, partially offset by cost management benefits. Adjusted EBITDA margin was 23%, up approximately 20 basis points. PIRM segment adjusted EBITDA totaled $46 million compared to $50 million in 2018. UWS adjusted EBITDA was $63 million compared to $65 million in 2018.

Finally, we continue to generate significant levels of free cash flow. For the 12 months ending March 31, 2019, free cash flow totaled $209 million, a 43% conversion rate of last 12 months' adjusted EBITDA, which included the impact of several discrete items. First, the impact of a second quarter 2018 benefit from a contract amendment that accelerated revenue recognition by approximately $23 million. Second, a legal settlement of $16 million dispersed in the second quarter of 2018. And third, accelerated timing of our operational investments in capital expenditures for 2019, which support our efforts to achieve our longer-term margin targets.

Normalizing for these discrete items, our conversion rate would have been approximately 52% on a trailing 12-month basis. Our relentless focus on productivity and data driven insights has resulted in a durable and cash generative business model. Over time, CoreLogic has effectively balanced debt management, investment and growth in margin expansion opportunities and the return of capital to our shareholders.

Over the past eight years, we have repurchased approximately 47 million or 41% of our common shares for approximately $1.4 billion. In 2019, we plan to continue this balanced approach to capital management and repurchase 2% to 3% of our outstanding share count. In addition, we remain focused on prudently managing our debt levels as we elected to make $23 million in voluntary prepayments against our outstanding term loan obligations during the first quarter.

I will close my remarks today with a discussion on financial guidance. Our full year 2019 financial guidance and market outlook of 5% lower U.S. unit volumes remains unchanged. We will provide updated full year guidance as needed during our upcoming second quarter earnings release cycle.

With regard to the second quarter of 2019 based on normal seasonality patterns and our current view of market volumes as well as accelerated investment timing, we expect revenue to be in the range of $430 million to $450 million. In terms of adjusted EBITDA for the second quarter, we expect to be in the range of $125 million to $135 million. The outlook for revenues and adjusted EBITDA I just outlined include currently anticipated impacts of our AMC transformation and the wind-down of our legacy mortgage technology and default technology related platforms.

In conclusion, we achieved very solid operating and financial results in the first quarter, and we believe we are well-positioned to continue to deliver strong financial results throughout 2019.

Thanks for your time today. I will now turn the call back over to the operator for Q&A.

Questions and Answers:

Operator --

And we will now begin our question-and-answer session. (Operator Instructions) And our first question will come from Bill Warmington with Wells Fargo. Please go ahead.

Bill Warmington -- Wells Fargo. -- Analyst

Good morning. Good morning, everyone.

Frank Martell -- President, Chief Executive Officer and Director

Good morning.

Jim Balas -- Chief Financial Officer

Good morning.

Bill Warmington -- Wells Fargo. -- Analyst

So, first question for you is I, want to ask about the appraisal business. Back in July 2017, you guys had announced 10 new VSG customers. And I wanted to ask if you're handling a meaningful portion of their volume today and also to ask about whether you still consider the appraisal market to be an opportunity for secular growth in terms of consolidation and market share capture?

Frank Martell -- President, Chief Executive Officer and Director

Hey, Bill. This is Frank. Good morning and thanks for the question. Yeah, so I think, as you may know, when we put -- assemble the appraisal company, it was opportunistic and we saw an opportunity to expand, and it was projected to be an expanding market, the market has turned around and contracted on. And we've had -- some of our major clients have experienced some challenges in the market, which have been more accelerated than the market trends itself.

So there has been a bit of noise in the equation there. I think we still see a lot of opportunity in the appraisal that in evaluation area. We have a great platform business which is now about half of the revenue. I think the challenge on the AMC portion is to derive greater value for the offering. We had intended to automate and drive technology into that process. What we're trying to do is accelerate that. Revenue is flowing through from all of the clients that you mentioned, although we're still concentrated in the two founder clients to a large degree. I think this transformation program that we are accelerating will result in a more rapid diversification.

And as I mentioned in my remarks, a more automated and faster churn time model, so it's a different model. It will not appeal to every lender in the marketplace, would be my estimate at this juncture, but it will appeal to those folks that are looking for high quality, high value and speedy churn times. The other thing I would say, which is not unimportant, is that the appraisal operations have generated tremendous amount of data. It's probably the most current and highest value data on properties that's been fed into our repository. So there is a tremendous value that's been derived through having those operations and simulating that data.

So, I think it's a -- change in the market, I think, has resulted in moving forward our plan on automation, and I think probably going to even more automated model. I think it will grow with the secular market shift, eventually the market will grow. I think we'll go along with it. It probably -- I don't think we're going to be looking for earth-shattering growth, if you will, through that. We're more focused on a premium value higher margin revenues.

Bill Warmington -- Wells Fargo. -- Analyst

Got it. And then for my follow-up question, we noted the tick up in CapEx, just wanted to ask what was driving that whether that was Google Cloud platform or something else there?

Frank Martell -- President, Chief Executive Officer and Director

Yeah, I think -- as I mentioned it, the largest -- by far and away, the largest single investment with the Google Platform. And we are trying to do is, we're trying to -- we moved up some spending actually. So, it's even more than we had originally planned, largely due to trying to get as much on the GCP as possible to derive as much savings as possible for 2020 and beyond. So that's really by far and away the biggest chunk of it. I would say, the other spending is related to we're doing a lot more R&D around the data repository. So, as I mentioned, again, we spent an visualization structures, et cetera. So that -- that will be the other part of it.

Bill Warmington -- Wells Fargo. -- Analyst

Got it. Thank you very much. Appreciate the insight.

Frank Martell -- President, Chief Executive Officer and Director

Thanks.

Operator --

And our next question will come from Bose George with KBW. Please go ahead.

Thomas McJoynt-Griffith -- KBW -- Analyst

Hey, guys. This is Tommy on for Bose. I noticed that the PIRM margins dropped a little bit year-over-year. How much of that is attributed to Symbility acquisition?

Jim Balas -- Chief Financial Officer

Really de minimus. I think a lot of the margin -- as we've said on past calls, there's a lot of investment going into that segment. So if you look at our investments that we just talked about with the previous caller, quite a bit of our investment focus hits (ph) PRIM as well. And then, I think -- you had market slowdown, market slowdown in (ph) PRIM tends to hit higher margin areas as well. So that's again a little bit of the rotation there has caused a little bit of margin, but it's primarily the investment spending that we're making with the lesser amount coming through the market.

Thomas McJoynt-Griffith -- KBW -- Analyst

Okay. Thanks. And then, separately, there is a headline in March about Equifax and FICO partnering up to sell data directly to banks. Do you expect that to have any impact on your credit solutions business?

Jim Balas -- Chief Financial Officer

No.

Thomas McJoynt-Griffith -- KBW -- Analyst

Okay. Thanks, guys.

Operator --

And our next question will come from Kevin Kaczmarek from Zelman & Associates. Please go ahead.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Hey, guys. Thanks for taking the questions. I guess, we've noticed a significant pickup in the iBuyer trend in recent quarters with a number of companies starting to buy homes remotely based on automated valuation models with an idea to eventually automate much of that decision-making process, including limiting in-person site visits. I guess, where can you guys benefit from this? Are you already seeing demand from these types of homebuyers in your -- either in your data or your services?

Frank Martell -- President, Chief Executive Officer and Director

I would say, it's, still fairly nascent. Kevin, I would say, in the grand scheme of the volumes in the U.S. however, I think technology in this area and more broadly is accelerating. That's one of the reason frankly you're seeing an acceleration in our spending. I think that the home-buying experience is a big focus in fintech, it's a big focus of ours. We picked up home visit last year, which is around visualization of the property. So it's definitely going to emerge, I think, over the next several years as a much more significant force. We'll see how it evolve from a lending perspective, but certainly from a home buying experience perspective, I think you're going to see a fair amount of change. And I think we played very nicely in that space with our realtor platform and our solutions around the property and the home-buying experience.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Okay, great. And then, on the international revenue, can you give us a sense of the growth either with or hopefully without acquisitions and with some of the markets like Australia maybe slowing a bit, can you give us a sense of the impact you're seeing on your businesses there?

Jim Balas -- Chief Financial Officer

Yeah. On the international front in Australia, we are starting to see some decline. They've had a multi-decade bull run in that market. Volumes are expected to be down about 10% in 2019. So we did see that hit the number. Coupled with that, we also had some FX for about $3 million to $3.5 million that impact the international business as well.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

And when you see -- I guess when you see volumes are down and you're seeing that hit the numbers, is most of this is revenue subscription and you're seeing that impact subscription levels or do you have volume sensitive revenue there?

Jim Balas -- Chief Financial Officer

We have both.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Okay.

Frank Martell -- President, Chief Executive Officer and Director

Yeah, obviously Kevin, the volume impact is more on the -- we have a very large valuation platform that has kind of the dual revenue characteristic to it, but obviously when there is volumes there slowing, you see a little bit of that. I mean, in the grand scheme of the company, it's a small number.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Yeah.

Frank Martell -- President, Chief Executive Officer and Director

But as Jim mentioned, probably FX is as big an issue with the market, but they've had two things in Australia. One is the -- they've had -- I think it's 20 years of GDP expansion and housing is going on with it, tremendous run up in prices. So at some point that slowdown will be expected. But they also had this royal commission that looked at the banks and some of the practices of banks and that certainly has caused us a bit of a pause in some of the discretionary spending as they focus a lot on the repercussions of that, which were very significant for, I think, the larger institutions down there.

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Okay. All right. Thanks for taking my questions.

Operator --

And our next question will come from Darrin Peller with Wolfe Research. Please go ahead.

Darrin Peller -- Wolfe Research -- Analyst

Thanks, guys. All right, thank you. Guys, I just want to start off, Frank, maybe higher levels, but when we think of the business' growth potential at least non-mortgage sensitive growth, I mean, kind of look at it being mid-single digits maybe with the high and good times. And the reality is, the international side is facing more mature markets that are a little bit tougher. Insurance is still doing well. The data analytics side doesn't seem like it's really selling much -- much greater and they may just be the backdrop of a tough market. Can you give us a sense of what you see being the right organic profile of the business in the sort of mortgage neutral environment going forward and what the drivers would be?

Frank Martell -- President, Chief Executive Officer and Director

Yeah. I don't think, Darrin -- I think, first of all, I think we have continued to make the right investments. I talked a lot about the evolving to non-mortgage adjacencies. I think we've had great success there. I think that the emphasis on platforms which are more recurring revenue streams than volume sensitive. So, I think those are introducing greater stability. If you look at our revenues, vis-a-vis the mortgage cycle that held up really well both inorganically and organically. I think the reality is, I think our -- this year and certainly last year and the year before, significantly down markets, and I think we've held up well. I think going forward, I don't see any reason why the change in the outlook. I think we're still kind of a single digit grower, and with an acceleration, should the market cycle change, eventually there will be growth in the mortgage market in the U.S. Most people are projecting this downtrend to moderate and turn positive in the next couple of years. So I think we're really well-positioned to capitalize on that with high flow through rates.

So, I think you still -- we should still see that. I think right now, you're just seeing a lot of pressure on the lenders. And when that happens, they're not really anxious to spend a lot of money. And then, frankly, we talked about -- we've had some friction on the -- certainly on the AMC side. And I think just that reflects our client constituency more than anything else. So, I think once we get through those factors, you're going to see that that mid-single digit be more consistent. And I think that's the right kind of, as you look at the business rate, that's where we look at it, with again some acceleration of these type of players.

Darrin Peller -- Wolfe Research -- Analyst

Okay. All right. Thanks. Just as a quick follow-up. The cost takeout plans continue to progress well, and obviously that came in well. So I guess, first of all, how are you thinking about your trajectory around your EBITDA guidance? I know you did not beat it, typically you don't this quarter. But just curious, maybe your thoughts over there, especially in the backdrop of the app data we've seen in the mortgage areas maybe a little better. Thanks again, guys.

Frank Martell -- President, Chief Executive Officer and Director

Yeah, I think as you look at this year, as Jim talked about, we're going to see the normal selling season. I mean, everybody is looking at what the spring season look like to see the ramp. So far, I think it's OK. Rates have bumped around. I think the market is more sensitive right now to rates, and I mean it makes a lot of sense. But a couple of basis points here and there seem to make a lot of change. But I think we're going to be, I think, fine this year and kind of consistent with the seasonality patterns we normally see.

I think the wildcard this year for us is the operationalization, that's a long word of the AMC transformation because we are going to -- as we said earlier, we're going to be shedding revenue that's not productive for the company. And I think as we get to a more automated offering, that's going to be -- that's a lot of intricate operational planning. Clearly most of that's going to hit in the back half of this year -- second half of the year and probably dribble into the first quarter of next year. So that's really the biggest wildcard I think we have. The rest of the company really is operating very strongly in my view and the cost takeouts are our all structured programs that have been implemented in flight. We're not looking for some magic bullet out there to top up. We've got everything in flight.

Yeah, the mortgage market since we launched the 30% margin target, the mortgage market has declined 40%. So we've actually, if you look at what we've done on the cost side, it's a lot more than we were looking at that way back when. But good teams rally and that's what we did. So I think we're in good shape going into next year. And I think the big the big wildcard is that is really the AMC piece. So you saw a lot of the wind down impact on the technology -- legacy technology stuff happening in the first quarter with a fairly chunky drop, and you'll see that peter off. So it's really the AMC piece.

Darrin Peller -- Wolfe Research -- Analyst

Okay. All right guys,. Thank you very much.

Operator --

And our next question comes from Ashish Sabadra from Deutsche Bank. Please go ahead.

Ashish Sabadra -- Deutsche Bank -- Analyst

Yeah. Thanks for taking my question. So, my question was on the flood and property and tax, you saw some good growth there. Was there any share gains? Can you talk about what's driving that and the sustainability of the share gains going forward?

.

Frank Martell -- President, Chief Executive Officer and Director

Yeah. So -- good morning. So, both the tax and flood businesses had strong growth and have been consistently outperforming. I mentioned in my prepared remarks, we're having a lot of success with integrating our offerings across not only tax and flood but other capabilities, so that that solution sets and pricing have driven our success in those areas. I think, in the case of flood, we've also had a flurry of product enhancements and new products, which is also added to $11 million growth -- revenue streams and supported their growth as well. So, I think it's been a combination of those factors.

Ashish Sabadra -- Deutsche Bank -- Analyst

That's helpful. And then, just on the property inside front, that -- the revenues there have been declining for a couple of quarters now. How should we think about the growth in that business as that the mortgage volumes starts to come back, could that be a catalyst for that particular business line growing going forward?

Frank Martell -- President, Chief Executive Officer and Director

Certainly it will be a catalyst for growth. I mean, that particular unit is subject to market volume pressure, things like our fraud service, for example, would be directly related to that, but -- so as those volumes churn, we will see a pickup there. In addition, we spent a fair amount of money on improving some of the service levels and offerings in that area. I expect that to be impacting probably toward the back half of the year but impacting our revenue trajectory as well in a positive way.

Ashish Sabadra -- Deutsche Bank -- Analyst

That's helpful, thanks.

Operator --

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

Stephen Sheldon -- William Blair -- Analyst

Hi, guys. Good morning. First within Credit Solutions, it seemed to hold back more than the broader industry headwinds, just any color you can provide on trends in that business and maybe a high level view on the outlook going forward?

Jim Balas -- Chief Financial Officer

Hey, Steve, this is Jim. On the credit side -- on the Credit Solutions what you saw is few things. One, obviously the market impact, we also had some share shifting going on. There's a lot of price pressure in that particular part of the business with clients due to fall out rates. And then the other thing we had was automotive volumes, if you look at the average age of vehicles it's extending and you have fewer volumes, so that impacted us as well during the quarter.

Stephen Sheldon -- William Blair -- Analyst

Got it. That helps. And then, I guess, for the follow-up within the appraisal platforms, you talked some before about expanding the type of solutions that can be tied into FNC and Mercury like title orders. So, I guess, in that context, can you help us frame the opportunity there and where the company might be in terms of driving that opportunity within the appraisal platforms?

Frank Martell -- President, Chief Executive Officer and Director

Yeah. I mean, it's -- that's been a great add for us and we're adding more clients there as the capabilities have been put on the platform. So I think that will be a good margin opportunity for us as well. We're really only starting to see, we operationalize the second half of last year. We started seeing a decent volume ramp in the first quarter. So I think that will progressively add. It's not, I'd say, material to the total company, but certainly is supporting high margin growth, and that area did grow in the first quarter. And one of those reasons was the title operation there.

The other area there is that those platforms are helping us with the program on the AMC piece of it too because they provide us with some support on the automation front and the analytics front as well there. So that's also been a help for us.

Stephen Sheldon -- William Blair -- Analyst

Great, thank you.

Operator --

And our next question will come from Chris Gamaitoni from Compass Point. Please go ahead.

Chris Gamaitoni -- Compass Point -- Analyst

Hi, guys. I wanted to follow-up on the CapEx spending. You know that you accelerated some into the first quarter, I was wondering if you had an estimate of kind of what the remainder of the year would look like, and what the 2020 levels would look like relative to 2019?

Frank Martell -- President, Chief Executive Officer and Director

Yeah. Hey, Chris. How are you doing? Yeah. CapEx -- we don't guide on CapEx obviously, but I think that you should see numbers similar year-over-year, it's probably a little bit -- it could be a little bit more but we're targeting at similar levels to last year. So that's kind of the headline there on CapEx.

Chris Gamaitoni -- Compass Point -- Analyst

It's similar amount to last year -- I'm sorry, I'm confused, it was similar level of growth over the last year, is that what you're...

Frank Martell -- President, Chief Executive Officer and Director

Chris, on the CapEx, you saw the lift in the third quarter and fourth quarter of last year, and then Q1 was a little bit higher. We expect that to continue into the second quarter. And then, as we exit 2019, it should start to descend somewhat.

Chris Gamaitoni -- Compass Point -- Analyst

Okay.

Frank Martell -- President, Chief Executive Officer and Director

So it can be H1 more heavy ultimately.

Chris Gamaitoni -- Compass Point -- Analyst

That's very helpful. Thank you. And then, do you have an estimated -- you gave us an impact or an estimated impact on revenue and EBITDA for the AMC optimization and then exiting legacy plan. I was wondering if you could give us the impact that occurred in the first quarter?

Frank Martell -- President, Chief Executive Officer and Director

Yeah. First quarter was pretty modest, we saw it more -- we saw the revenue decline obviously more on the technology asset, so it's still early stages, pretty modest amount, I would say.

Chris Gamaitoni -- Compass Point -- Analyst

Okay. Thank you. I'll jump back in the queue.

Operator --

And our next question comes from Andrew Jeffrey with SunTrust. Please go ahead.

Andrew Jeffrey -- SunTrust -- Analyst

Hi guys, good morning.

Frank Martell -- President, Chief Executive Officer and Director

Good morning.

Andrew Jeffrey -- SunTrust -- Analyst

I guess kind of a two-part question high level strategic. I appreciate the goal and the desire to diversify a way, I guess, if you think about it that way from mortgage exposure. Do you get there sort of just mechanically by virtue of the strategic changes that you're making in your valuation business? And I guess as a corollary when you look at the business sort of pro forma for the strategic shifts, do you feel like you've got the right assets, is that kind of the go forward composition of businesses with which you're comfortable for sustainable top and bottom line growth?

Frank Martell -- President, Chief Executive Officer and Director

Yeah, Andrew, so this is Frank. First of all, I think the composition of a company will ebb and flow depending on obviously such factors as the mortgage market volumes and other things. But so the 50% what we're trying to do is to have balance across the verticals so we're not -- that 50% came in when frankly the company was dominated by mortgage revenues. So we pulled that back dramatically. And so that's why 50/50 is kind of a theoretical goal. I say that that feels right to me. The non-mortgage pieces and a great number of the mortgage pieces are high margin even in a low cycle. So, I think that's the engine to grow up. The data repository and the tech stack and the infrastructure the company is increasingly integrated. So we can use that same foundation to drive new products and services into different verticals. So that's really what we're trying to do there with things like public sector, things like insurance and others. So, I'd expect, we're in a better position to do that than we ever been from a capabilities perspective. I don't think -- the current mix is good. We talked about -- we look at international as an opportunity longer term. Is there anything that is specifically out there at the moment not so much. But I think as we look at it, we have a lot of opportunities.

I think we've got a great set of capabilities and revenue streams, tremendous client set. It's more diversified. I think, diversification of verticals is good just because mortgage has been so challenged coming out really out of the great recession and it's quite unusual of we have three years of negative mortgage volumes in any cycle frankly, so -- and especially when you've got full employment and a strong economy. So we just have to work through that. That's not going to be negative forever obviously. So I think we're -- I think we have a reasonable chance of getting to growth over the next couple of years.

So I kind of like our position. We're not going to shrink our way, I think, maybe your first part your question related to AMC is going to shrink us down to 50/50. That's not the intention. So, I think, on the -- just to reiterate on the AMC, it's about higher value as it is across all of our offerings and where we think we can add more value to our clients. And if the value is just not there for the client in the traditional product offering, we're not going to sit there and ride that. We're going to try to take proactive action, and that's what we've done on the AMC piece of it. And it's going to be a different offering, and it's going to be -- I think for those clients that want that more premium offering, I think it's going to be compelling versus the more traditional model which is frankly what we put together back in 2016-2017. So I feel good about the AMC strategy.

Andrew Jeffrey -- SunTrust -- Analyst

Okay. That's helpful. Thank you.

Operator --

And our next question comes from John Campbell with Stephens Incorporated. Please go ahead.

John Campbell -- Stephens Incorporated -- Analyst

Hey guys. Good morning.

Frank Martell -- President, Chief Executive Officer and Director

Good morning.

John Campbell -- Stephens Incorporated -- Analyst

Just on the product wind-down and business transformation, you guys called out, I think, the $70 million to $100 million of the revenue impact in guidance. I just want to make sure I'm getting this down, right. So that's a range for this year only and you also expect a rev impact in 1Q 2020? And then, it sounds like you're not going see much of a negative impact in 2Q with most of this hitting in the second half of this year, is that right?

Frank Martell -- President, Chief Executive Officer and Director

I don't think we've commented on 2020 in terms of the wind-down. The $70 million to $100 million is a 2019 figure, and it's the combination of the software assets and you saw the drop off of about $7 million of the software assets, a modest amount on the AMC and that will progress over time. But it's hard to predict the exact amounts because we're working with our clients through this process, but we still feel that range is about right.

John Campbell -- Stephens Incorporated -- Analyst

Okay. But I think you said you expect it to roll off over the next four quarters, so that would I guess technically take you into 1Q 2020. So are you expecting some of this to roll into the first part of 2020?

Frank Martell -- President, Chief Executive Officer and Director

Yeah, John, it's really, so just taking the two pieces, the AMC is, as I mentioned earlier, is the more -- yeah, it's a bigger variable just because we have a lot of volume and these are important products and services to the clients involved. So, the switching of that volume to other vendors takes a while. So that's probably going to be -- there will be a one-off in the first quarter is my best estimate at this juncture. I think on the MTS, the mortgage technology and default area, basically we've put the sharper ramp down but there will be some, I'd say, de minimis stub revenues across really all the quarters of 2020. But that's just very very small. So really what we're really talking about is the AMC transition. Again, it's hard to project but I would say clearly at this juncture based on all our planning it's safe to say that the majority, not all but the majority will really be centered around third and fourth quarters, I'd say particularly third quarter, and maybe (multiple speakers) the second quarter ramp -- will ramp up in the second quarter and the third quarter and then start to ramp down.

John Campbell -- Stephens Incorporated -- Analyst

Okay, that's great color. And then, as my follow-up, this is a little bit of a kind of a two-part question, but can you guys talk to your plans around the project upstream or the upstream launch and what you guys are up to there? What they're looking to achieve and whether that's going to be a needle moving opportunity?

Frank Martell -- President, Chief Executive Officer and Director

Yeah, I think, I prefer not for competitive reasons actually, but yeah, just to say that you know we're working on it. I think it's just better not to get to that level of detail.

John Campbell -- Stephens Incorporated -- Analyst

Okay. I guess, can you maybe just talk to exactly what it is you're doing? I mean, is it something with MLS system without, I guess, showing your hand so to speak?

Frank Martell -- President, Chief Executive Officer and Director

Well, we're working on data management and facilitation with our clients on the real estate area to make better use of the data and to manage the data in a better way, because it's the biggest focus area there for us.

John Campbell -- Stephens Incorporated -- Analyst

Okay, great. We'll look for further updates in the future. Thanks, guys.

Operator --

And our next question comes from Glenn Greene with Oppenheimer. Please go ahead.

Glenn Greene -- Oppenheimer -- Analyst

Thank you. Hey, Frank, could you just maybe qualitatively talk about the AMC transformation efforts at this point, how it's sort of running versus your internal expectations and any kind of early client feedback you're hearing or seeing at this point?

Frank Martell -- President, Chief Executive Officer and Director

Yeah. I'd say, Glenn, the feedback from the client is variable by client. We've got -- I'd say, it runs the gamut from no thank you to it's great, love it. And so, I think it's really -- and that's I think to be expected. I think that we are in test with a number of clients on different aspects of the new service, so we're in the field with some of the new service, I feel really good about that, the capability.

So I think what clients see it they like it, but I think they're just a number of our traditional clients that they're OK with the value of the traditional and there's a lot of I mean value compression, honestly, I think that I -- as we look forward, I would expect to happen in that market and or at least certainly cap on the price and appraisals you guys heard that the news so we need to offer different service. So I think we've done-I think in terms of the actual roll out of the service it's complicated because you've got origination workflows that are embedded in the clients overall workflows and even when you diversify your vendor network you have a lot of operational technology change, operational change, QC, et cetera. So it takes a while to figure out. And then we are one of the few national level providers. So we're in all these counties. So there also -- it's a geographic aspect to it as well so there is just a lot of moving parts. I don't think anything is rocket science as it relates to ramping down. But it takes time. And you have to do it carefully to make sure that your prophecies are safe and sound and producing the right quality.

Glenn Greene -- Oppenheimer -- Analyst

Okay. And then, the interesting thing in the quarter was, the valuations revenue at least relative to our expectations was the big upside in the quarter. My guess is, you haven't -- as you suggested, you haven't seen much impact from a revenue perspective from the transformation yet. But did the diversification efforts of the two big clients slowdown or is there any explanation for, I won't call it strength, because it was down year-over-year, but certainly much better than we would have thought. And also, could you just update us on the profitability of the valuations business at this point?

Frank Martell -- President, Chief Executive Officer and Director

Yeah. So we actually grew -- as I mentioned in my prepared remarks, we grew the platform business in the first quarter, which was good. In terms of the actual diversification effort, not a big change. I'd say that the acceleration or transmission did affect our revenue. We -- honestly, if you talk about quarterly splits at this juncture, it's hard to tell. But I would say that that's certainly -- I'd say, the revenue trajectory there wasn't the reason why we were ahead of the estimations honestly.

I think it was -- it's a little slower than I thought. But I guess when you look out of complex, so (technical difficulty). As I mentioned, we'll wrap up the attrition as we go forward in the June and then in the third quarter. So, it's certainly, Glenn, that's the reason way we were better on revenue.

Glenn Greene -- Oppenheimer -- Analyst

Okay, thank you.

Operator --

And our next question comes from Jeff Meuler with Baird. Please go ahead.

Jeff Meuler -- Robert W. Baird -- Analyst

Yeah, thank you. Let me just -- thank you. Let me just pick up on that last point, which is, so what is the growth profile of the platform business in this environment and what margin are you running at? And then, can you just remind us when you talk about the platform business, it's built through several acquisitions. So, what's integrated what stand-alone like, are there a couple of different related businesses and platform? If you could just let us know what's integrated or how it's operated? Thank you.

Unidentified Speaker --

Yeah. So, from a management and a business perspective there, it's integrated. So, essentially, if you look at the -- we have an end-to-end solution for order entry and fulfillment for valuations and now title. And I think what you've seen in the acquisitions is more of a different market constituencies for the full service and also a little bit of a different, it's like a Chevrolet, Buick, and Cadillac type of thing. It's a gradation of offerings. The margin profile of the business is well above 30%, I would say, and the growth profile -- we were growing -- it's a business that is over $100 million of revenue and growing. I would say that right now it's the growth path for the year, I think is it should grow. And if you look at the context we said the market will be down 5%, we're still growing in the down market.

So I think it's a great business and one that is really complementary to other capabilities. So we're really stoked about that, and it's become -- and it will become really more than 50% of total revenue in that area as we get out of this year.

Jeff Meuler -- Robert W. Baird -- Analyst

And what's driving the growth like -- what sort of the growth between new clients, clients pushing more volume through your platform, clients buying additional services if we break it down kind of along those lines?

Frank Martell -- President, Chief Executive Officer and Director

Yeah. I would say, definitely we've had a lot of share gain. So, new clients have been a benefactor. I'd say that -- that and the addition of new service, I think Jeff has been the two way biggest drivers.

Jeff Meuler -- Robert W. Baird -- Analyst

Okay, that's helpful. And then just last, I think I'll be in the queue at the segment level, but is it possible to give us the acquisition contribution to at least the segments in the quarter for revenue, if not the sub-segment revenue lines? Thank you.

Jim Balas -- Chief Financial Officer

Yeah, Jeff, this is this Jim. On the M&A, we had about $12 million in the PIRM segment. The bulk of that was Symbility but we had two smaller acquisitions that had some revenue contribution as well. And then, on the UWS, we had about $5 million to $6 million.

Jeff Meuler -- Robert W. Baird -- Analyst

Very helpful, thank you.

Operator --

And our next question comes from Nick Johnson with Piper Jaffray. Please go ahead.

Jason Deleeuw -- Piper Jaffray -- Analyst

Hello. This is -- this is actually Jason Deleeuw. Thanks for taking the question. I'm just trying to get a sense for new market opportunities for the property data business, new market opportunities in new products. I'm just trying to get a sense, can we drive growth for the property data business outside of the core customers by moving into new markets or are there new products that you can roll out?

Frank Martell -- President, Chief Executive Officer and Director

Hey, Jason, this is Frank. So, yeah, I mean, for example, the R&D -- the R&D spending, we're doing a lot of work with the public sector. We have great revenues with outfits like FEMA. We have a growing portfolio of revenue with like the U.S. Department of Agriculture. So taking the data sets and producing more real time and more granular cuts, et cetera, have opened up the public sector more so and these are big client relationships that I think would be a growth area for us in the future. State and local also have been a growth area for us as well. So, I think those investments, a lot of growth in areas like of the data on the visualization of the data. We talked about home visit that is well ahead of our buy plan. And I think it reflects the demand from visual data around properties, things like virtual staging, visual tours, marketing of properties, et cetera. So, I think there's tremendous demand there. A lot around tremendous emphasis even on the traditional lenders and the lending community know your property, it's been -- iit's a bit (ph) model right now in the industry. That involves obviously our property data.

And so, I think that's where we have an advantage in quality and scope of data. And what we're trying to do is make sure that the delivery systems and the usability of the data is maximized, and that has through some of these different techniques that we have written in the company today and are investing behind. So I think there's no end of demand for property information. The scale of it varies obviously, but to me the biggest demand centers around the public sector, energy, telco is a big area of demand and I think internationally as well. And I think as somebody mentioned earlier in the call, I think FinTech area, there is a lot of -- we partnered with a lot of FinTechs that are trying to get started around they're really powered by our data in a number of cases. So I think from that standpoint, small numbers now obviously and they come and go pretty quickly a lot of them. But as far as I am concerned, some of them will gain more traction and we're right there at the table. So -- but there is a lot of opportunity areas.

Jason Deleeuw -- Piper Jaffray -- Analyst

And then just quickly, any sense of how much that increases the size of your addressable market for the property data business? I mean, is it like a 50% increase or, I don't know, maybe if you don't want to use percentages, maybe just as a meaningful increase. I'm just trying to get a sense of, like how much of a needle mover this opportunity could be?

Frank Martell -- President, Chief Executive Officer and Director

I think clearly like things at the public sector are needle movers. That's an area again that when you get into the public sector, obviously contracting, there's other things, you've got longer cycles and different factors but certainly big dollars there depending on where you play. So it's really -- it's -- that's a question more by market and vertical. But I would say that there is significant -- in terms of addressable market, I've seen numbers all over the place. We had a study done a number of years ago, $20 billion. It's hard to tell, was the total size of the price, but it's significant enough to be material to our business and we're a (ph) $7.8 billion revenue. So, I'd say yes, all those opportunities represent collectively and some on an individual level very significant opportunities.

Jason Deleeuw -- Piper Jaffray -- Analyst

All right, very helpful. Thank you.

Operator --

We will take our final question from Ashish Sabadra from Deutsche Bank. Please go ahead.

Ashish Sabadra -- Deutsche Bank -- Analyst

Sorry. Yes, this is Ashish once again. I just had a quick model question about the organic growth in the quarter. I know you gave a lot of different pieces, but I was just wondering if you had organic growth in the quarter? Thanks.

Jim Balas -- Chief Financial Officer

Yeah, so, this is Jim. On the organic growth, it was essentially flat and the way you get there is the market. Overall we were down about 6% and the market impacted us by about 7%, M&A was a plus 4%, and then wind-down with an FX for about 3%, and that -- so therefore organic growth was essentially flat. Now that includes the AMC. If you take that out, we were up about a point.

Ashish Sabadra -- Deutsche Bank -- Analyst

Thanks a lot.

Jim Balas -- Chief Financial Officer

Great.

Operator --

And we will now conclude today's conference. Thank you for your participation. And you may now disconnect.

Duration: 64 minutes

Call participants:

Operator --

Dan Smith -- Investor Relations Officer and Senior Vice President

Frank Martell -- President, Chief Executive Officer and Director

Jim Balas -- Chief Financial Officer

Bill Warmington -- Wells Fargo. -- Analyst

Thomas McJoynt-Griffith -- KBW -- Analyst

Kevin Kaczmarek -- Zelman & Associates -- Analyst

Darrin Peller -- Wolfe Research -- Analyst

Ashish Sabadra -- Deutsche Bank -- Analyst

Stephen Sheldon -- William Blair -- Analyst

Chris Gamaitoni -- Compass Point -- Analyst

Andrew Jeffrey -- SunTrust -- Analyst

John Campbell -- Stephens Incorporated -- Analyst

Glenn Greene -- Oppenheimer -- Analyst

Jeff Meuler -- Robert W. Baird -- Analyst

Unidentified Speaker --

Jason Deleeuw -- Piper Jaffray -- Analyst

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