Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Executives

Dan Smith - Senior Vice President, Investor Relations

Anand K. Nallathambi - Chief Executive Officer, President, Director and Member of Acquisition Committee

Frank D. Martell - Chief Financial Officer

Analysts

Darrin D. Peller - Barclays Capital, Research Division

Kevin D. McVeigh - Macquarie Research

Carter Malloy - Stephens Inc., Research Division

Brandon Burke Dobell - William Blair & Company L.L.C., Research Division

Geoffrey M. Dunn - Dowling & Partners Securities, LLC

CoreLogic, INC. (CLGX) Acquisition of Marshall & Swift/Boeckh and DataQuick Information Systems Conference July 1, 2013 9:00 AM ET

Operator

Good day, ladies and gentlemen, and welcome to the CoreLogic Inc. conference call to discuss the acquisition of Marshall & Swift/Boeckh and DataQuick Information Systems conference call. My name is Sahisha, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Dan Smith, SVP of Investor Relations. Please proceed.

Dan Smith

Thank you. Good morning, and welcome to the CoreLogic market update call to discuss the acquisition of Marshall & Swift/Boeckh and DataQuick Information Systems. Speaking today will be CoreLogic's President and CEO, Anand Nallathambi; and CFO, Frank Martel.

Before we begin, let me make a few important points. First, we have posted our slide presentation, which includes additional details 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 expectations regarding the timing, integration and financial impact of this transaction; expected business and operational plans; performance outlook; plans on returning capital, 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 subsequently filed 10-Q.

Finally, with respect to financial guidance, CoreLogic will update our full year 2013 financial guidance, excluding the impact of this transaction, with the release of our second quarter 2013 financial results later in the month. We will revise this guidance to reflect the impact of this acquisition upon the closing of the transaction.

Thanks, and now let me introduce our President and CEO, Anand Nallathambi.

Anand K. Nallathambi

Thanks, Dan, and good morning, everyone. This morning, we announced that CoreLogic has entered into a definitive agreement to acquire Marshall & Swift/Boeckh and DataQuick Information Systems. I will begin the call today with an overview of the strategic rationale behind this transaction, and then Frank will summarize the acquisition and related financial details. We will conclude with Q&A.

Over the past 2 years, CoreLogic has delivered progressively stronger operating results, including record financial results in 2012 and so far this year. Our consistent track record of delivering strong revenue and profit growth and significant margin expansion is a result of our laser-like focus on a strategy that leverages the company's unique data assets and analytical capabilities, as well as the market-leading position and scale of our servicing businesses.

The acquisition of Marshall & Swift/Boeckh, or MSB, and DataQuick is a compelling and logical next step in the strategic transformation of CoreLogic. These firms benefit from data-driven, subscription-based business models. The acquisition materially expands our Data & Analytics segment, in line with our stated goal to grow this segment to greater than 50% of total company revenues within the next 3 years.

We're also adding unique and complementary data assets and analytical capabilities to create a scaled, market-leading insurance solutions group. The acquisition is expected to be accretive to 2013 financial results, and it should expand our overall EBITDA margins. As we aggressively integrate MSB and DataQuick into our operations, we expect to realize additional cost synergies and growth opportunities beyond those currently factored into the transaction assumptions, which Frank will cover later.

It is also important to note that our focus on driving revenue growth, margin expansion and high rates of free cash flow has given us the financial flexibility to purchase MSB and DataQuick and simultaneously increase our share repurchase program while maintaining prudent debt levels. Over the past 2 years, we have been transforming CoreLogic into a higher-growth, higher-margin company by focusing on 6 strategic pillars. These pillars have been discussed on our previously -- previous quarterly earnings calls and during our recent Investor Day in May. These include expanding our D&A segment; driving scale and operating leverage in Mortgage Origination Services; expanding our insurance and geospatial footprint; fully monetizing our data assets; reducing costs through Project 30 and TTI; and finally, consistently returning capital to our shareholders. The integration of MSB and DataQuick meaningfully accelerates progress towards these strategic imperatives.

I'll now turn the call over to Frank to provide a summary of the terms of the acquisition and a more detailed description of MSB and DataQuick.

Frank D. Martell

Thanks, Anand. CoreLogic is purchasing MSB and DataQuick from the Decision Insight Information Group, a portfolio company of TPG Capital, in a privately negotiated transaction. The total consideration is $661 million paid in cash. In addition to the purchase price allocable to MSB and DataQuick, this amount reflects the expected present value of cash tax benefits from acquired amortizable intellectual property and goodwill, as well as net operating loss carryforwards totaling approximately $115 million and the acquisition of MSB's 29.5% ownership interest in Symbility Solutions valued at $23 million.

Symbility is a publicly traded claims processing and estimated software provider headquartered in Canada. The purchase multiple for this transaction is 9.6x 2013 projected MSB and DataQuick pro forma EBITDA, including identified cost synergies of approximately $7 million. The transaction is projected to be 4.5% accretive to pro forma full year 2013 adjusted EPS and 16.8% accretive to adjusted cash EPS, excluding the impact of onetime reductions and acquired deferred revenue and other purchase accounting adjustments.

This transaction will be funded through a combination of cash on hand and the refinancing of our current secured debt facilities. This refinancing should extend our current debt maturities by approximately 3 years at rates and terms substantially equivalent to those in our current debt arrangements.

Net debt is expected to be approximately 2.5x adjusted EBITDA on a pro forma basis following the completion of this transaction. We expect to reduce these debt levels progressively beginning in 2014. MSB and DataQuick are high-margin businesses based on predictable subscription-based revenue models, and they deliver free cash flow conversion rates that are higher than CoreLogic standalone. These factors should further enhance CoreLogic's financial flexibility going forward. The transaction is expected to close during the third quarter of 2013 and is subject to customary closing conditions and regulatory clearance.

I'll now provide a brief description of MSB and DataQuick. MSB was founded over 80 years ago and is the leading provider of cost information and risk analytics for residential and commercial properties. Using proprietary data, algorithms and platforms that leverage best-in-class replacement and repair cost estimates, analytics and other services, MSB assists insurers in analyzing risks, underwriting property insurance coverage and estimating, managing and analyzing claims.

MSB services the majority of the top 100 P&C carriers, including 25 of the top 20 -- 20 of the top 25. The company's business model is built around unique databases, analytics and workflow tools. This includes replacement cost data covering over 440 kinds of residential and commercial structures and more than 100,000 unique business materials and supplies localized by ZIP code. This type of data coverage underpins MSB's leading market position. The addition of MSB more than doubles our insurance-related revenues. We expect the combination of CoreLogic's Data & Analytics and our geospatial assets with MSB's market-leading underwriting management solutions will provide additional insights to our clients and potentially accelerate future revenue growth.

From a financial perspective, MSB represents a scalable growth platform with strong adjusted EBITDA margins and free cash flow conversion rates above those at CoreLogic. MSB's deeply embedded solutions drive high client subscription rates with more than 85% of revenues under long-term contract. Renewal rates have historically run at 95%.

The acquisition of DataQuick expands and complements CoreLogic's existing Data & Analytics offerings. DataQuick sells data, analytics to real estate, mortgage and capital markets verticals. They also offer well-regarded custom credit, fraud monitoring and valuation tools, as well as flood zone determination services. Similar to MSB, DataQuick has a high percentage of subscription-based revenues and low client attrition rates.

Anand will now cover the strategic rationale of this transaction and how the acquired assets will fit into CoreLogic's business model.

Anand K. Nallathambi

Thanks, Frank. MSB and DataQuick are a natural and compelling strategic fit for CoreLogic. MSB scales our D&A segment, and at the same time, grows our insurance-related revenues to almost $100 million on a full year pro forma run rate basis. MSB's residential and commercial building cost information, analytics and business management services, combined with our existing geospatial capabilities and property-related data assets, present a compelling value proposition. This combination allows CoreLogic to provide insurance clients with new and unique insights into underwriting property coverage, as well as managing natural hazard risks and claims. We're excited about the growth prospects presented by the insurance vertical.

MSB has strong and long-standing relationships with most of the top insurance carriers. These carriers are increasingly adopting data, advanced analytics and tools for risk management and underwriting. The consolidation of DataQuick's property data, analytics, credit services and flood zone determination operations is highly complementary and synergistic to CoreLogic. These operations will be rapidly integrated into CoreLogic to achieve maximum scale benefits. DataQuick is also a respected provider of market trend data and research, which will be incorporated into CoreLogic's industry-leading insight platform.

In addition to the obvious financial benefits and cost synergies, we expect the combination of CoreLogic, MSB and DataQuick to yield significant future growth opportunities through the introduction of new products, services and workflow tools, which draw from a wide range of best-in-class data assets and analytical capabilities.

CoreLogic's business model is built around mission-critical data, analytics and services. At the foundation of everything we do, it's the most comprehensive database of property information in the U.S. and in Australia. We use this information to provide critical insight and services across the entire spectrum of the property life cycle.

Our Data & Analytics and Service Solutions are deeply embedded in the workflows of our clients 24 hours a day, 7 days a week. Our clients represent most of the leading firms in real estate, mortgage, insurance, financial services and consumer lending industries.

MSB and DataQuick build on and expand CoreLogic's existing solutions, scale and grow our insurance-related offerings. As I mentioned at the beginning of the call, MSB and DataQuick are a great fit with CoreLogic, and this transaction is strategically and financially compelling to us.

I'll now turn the call back to Frank who will wrap up our prepared remarks with a brief discussion on pro forma financial impacts, our share repurchase program for the balance of 2013 and some concluding thoughts.

Frank D. Martell

Thanks. As Anand mentioned earlier on this call, this transaction expands our D&A footprint in line with our imperative to grow the segment to greater than 50% of total company revenues and create a scaled, market-leading insurance solutions group.

On a pro forma basis for 2012, this transaction adds approximately $111 million in revenue and $54 million in adjusted EBITDA to CoreLogic standalone. In terms of revenues, it increases the percentage of revenues from D&A from 39% to just over 42% of CoreLogic total. Importantly, insurance revenues within the D&A segment jumped from 3% to just over 13%.

With regard to adjusted EBITDA margins, this transaction boosts CoreLogic's pro forma 2012 margins by 140 basis points to 30.1%. The contribution of -- to the D&A segment to the total company's overall adjusted EBITDA is expected to grow from 37% to 43%.

Upon closing of this transaction, MSB's operations and DataQuick's data licensing and analytics units will be reported within the company's D&A segment. DataQuick's flood zone determination and credit servicing operations will be integrated into CoreLogic's Mortgage Originations Services segment.

In addition to the acquisition of MSB and DataQuick, we announced today that we are increasing our 2013 share repurchase program from 5 million to at least 8 million shares. As most of you know, CoreLogic has relentlessly focused on profitable growth, margin expansion and higher rates of free cash flow conversion over the past several years. The success of our efforts have been manifested in our strong cash flow profile, which provides us with financial flexibility to complete this acquisition, and at the same time, significantly increase the return of capital to our shareholders by expanding our 2013 repurchase program.

Since becoming an independent public company in the middle of 2010, CoreLogic has aggressively returned capital through repurchase of more than $500 million worth of our common shares. Last year, we bought back 10 million shares for $227 million. This represents 10% of our outstanding shares and about 82% of free cash flow generated. The target of 8 million shares for 2013 represents 8% of our outstanding shares and the majority of free cash flow generated. We have purchased 2.9 million common shares so far in 2013.

The repurchase of significant numbers of shares reflects our belief that at current price levels, our common stock remains well below its long-term strategic value. As we move forward, MSB and DataQuick further boost our financial flexibility, and we plan to continue on providing our shareholders with the highest possible returns generated through a combination of investing in future growth and efficient return of capital.

As Anand mentioned at the beginning of the call, we have laid out a clear and focused strategic plan for building long-term shareholder value, and we are executing against that plan. Over the past 2 years, CoreLogic has delivered progressively stronger operating performance with record financial results in 2012 and so far in 2013.

We will continue to relentlessly focus on the pillars of our success: first, growing D&A revenues; second, driving operating leverage and market share gains in Mortgage Origination Services; third, completing our Project 30 cost reduction plan and the TTI; and finally, generating superior free cash flow to reinvest for growth and capital return.

We believe the acquisition of MSB and DataQuick is a compelling and a very logical next step in the strategic transformation of CoreLogic. These are iconic firms in their industries and possess subscription-based models with predictable revenues, high margins and cash flows. The breadth, depth, historical coverage and accuracy of MSB and DataQuick's data sets and analytical capabilities complement our own and should power new and innovative insights and solutions for our clients.

Financially, the deal is immediately accretive, and we will continue to maintain a prudent net debt level following closing. Our strong and flexible financial position allows us to increase the 2013 share repurchase program by 60%. The increase in the 2013 share repurchase program, taken together with the acquisition of MSB and DataQuick, is a clear signal that we believe passionately in the future value creation potential of CoreLogic.

On behalf of Anand, I would like to thank everybody for your time today. The entire CoreLogic team is excited about the future and in our ability to deliver on our business plans and generate outstanding results for all of our stakeholders in 2013 and beyond.

I'll now turn the call back over to the operator for Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Darrin Peller from Barclays.

Darrin D. Peller - Barclays Capital, Research Division

Congratulations on this deal. It clearly fits in your strategy of expanding into Data & Analytics, especially in the insurance side with the current revenue. But can you just discuss the opportunities here that really are both on the cost and revenue synergy side first? Really maybe you can help also expand some discussion on the growth rate of the business and what it could become maybe with cross-selling and what those opportunities may be, maybe around -- whether it's geospatial into your -- into the other MSB client base or maybe just further examples?

Frank D. Martell

Sure, Darrin. This is Frank. I'll lead off, and then I think Anand will amplify some of the revenue opportunities that we see. From a cost perspective, we're taking a $7 million synergy number. That's included in the financial results that I talked about. We believe that's conservative. That's based on identified and rigorous review. We know both MSB and particularly DataQuick well. And so we believe that those cost synergies are attainable. We tried to be prudent on that side, so we believe that's something that we can realize in quick order. We are very successful in integrating CDS Mapping, which we acquired in December. We will take the same aggressive approach on these assets as well. On the revenue side, I'll let Anand amplify, but from our perspective, we did not include a lot of synergies from a cost growth perspective. We want to be conservative on that side. That's not to say that we don't see significant upside potential by combining geospatial and property records, et cetera, with MSB's platform and MSB's data sets as well. So I think that's something that we think will be very attractive going forward, but I think more work to do on that front.

Anand K. Nallathambi

Yes, Darrin. The attraction for us with MSB was the complementary set of data that they have. And if you really look at it, it may not be apparent to outside perspective, but MSB specializes in replacement cost approach, and CoreLogic specializes in market sales approach. And both of them are good. On the appraisal side, it's written into the law in 38 states, that they have to look at MSB data as part of the appraisal process, and about 90% of the tax assessors in U.S. and Canada rely on MSB to value real property. And if you look at CoreLogic's core competency, it's in providing automated valuation models. The thing that combines both of it, and we've seen it with insurance clients adapting new technologies and new risk analytics, it's in bringing in natural hazards, risk analysis and location-specific intelligence. That put together we feel like is going to be a good growth area of innovation for us. We've seen that example with Hurricane Sandy and other natural hazard events.

Darrin D. Peller - Barclays Capital, Research Division

So when you look at the actual -- first of all, what is the actual revenue growth profile of the maybe collectively MSB with DataQuick together now? And what could it become as part of the CoreLogic umbrella?

Frank D. Martell

Historically, Darrin, it's been mid-single digits. It's been above that some years, but from a broad perspective, mid-single digits. Obviously, we just talked about we think that we can improve upon that as we go forward. I think early days, but our aspiration, obviously, is to grow this in line with the overall organic growth target that we set for the D&A segment at a minimum.

Darrin D. Peller - Barclays Capital, Research Division

All right, all right. And then just quickly, this is obviously a larger deal than you've normally done in the past. Can you talk a little bit about integration and whether there's anything we should be aware of? How much has to be done? Is there anything we need to watch out for from an integration risk standpoint? And then also management from these businesses. I mean, are you keeping some people on, and can you talk to that as well?

Frank D. Martell

Sure. The integration is going to proceed post closing. So are -- we need to go through the regulatory approvals. We'll do the requisite planning, but the company is in great shape. So the integration of these assets should be handled efficiently and quickly. I'd say the integration is more on the DataQuick side than the MSB side from a structural perspective, but it all fits perfectly into the -- in line with existing business operations that we have. All the management teams are coming over. We think they're great, and we really are excited about having those folks join the company. They're all tremendous experts in their respective fields, and we're really excited about the strength that, that adds to the company.

Darrin D. Peller - Barclays Capital, Research Division

And do you have plans to help incentivize them to stay on?

Frank D. Martell

Yes.

Operator

Your next question comes from the line of Kevin McVeigh from Macquarie.

Kevin D. McVeigh - Macquarie Research

I wondered, with these assets you're acquiring, who often would you be competing against most in the market? I mean, does this position you more against Verisk into the Data & Analytics segment, specifically on the insurance side, or are there other players out there as we think about market-facing opportunities?

Anand K. Nallathambi

Kevin, this is Anand. I'll address MSB first and then go to DataQuick. MSB, if you really look at it over the last 8 years, they've carved a real niche, and they are the experts when it comes to replacement cost approach. They look at market data on construction materials, and there's like about 100,000 line items that they track. And in terms of reliability and client following, they have a very, very sticky product out there, and a lot of the clients that they have are on the top 25 insurance clients. They've been with them on average of 25 years. So that kind of speaks to how they are well entrenched in the marketplace out there. Their competition, obviously, would be Verisk. It's a division of Verisk called Xactware. And on the DataQuick side, they have been a regional provider and also a data provider out there. They also sell into the mortgage industry and real estate industry. We're very familiar with them, and they're also a data partner -- data licensing partner for us. So it's much more of a complementary asset on that front.

Kevin D. McVeigh - Macquarie Research

Got it. And then in terms -- it sounds like you folks have been around these assets for a while. Was this be kind of an auction? I mean, how long were you circling it? Just because it is a transaction of a larger size than what you've done historically. And then just on top of that, I want to make sure I understand, was the purchase price $776 million if you add back the NOLs or is it $661 million? I just want to make sure I've got the mechanics on the math in terms of purchase price.

Frank D. Martell

Okay, sure. So Kevin, it's $661 million total, inclusive of everything. It was not an auction. We negotiated this transaction with TPG. So there was no auction. We try to avoid auctions, obviously, to the extent humanly possible, and so similar to CDS Mapping, this was also a negotiated transaction.

Kevin D. McVeigh - Macquarie Research

Okay. And then, Frank, just where did the NOLs come from? I mean, they seem like they're relatively profitable businesses. So where did the $115 million in NOLs come from?

Frank D. Martell

That comes from the historical -- these units and several other aspects, the intellectual property and other aspects as well. It goes beyond -- the $115 million goes beyond just the NOLs, Kevin, and there were other businesses that were in the group historically that generate these losses. We think the 2 assets that we're acquiring are long iconic firms, profitable firms, but there were other assets that were owned by these companies over time that are no longer with us.

Kevin D. McVeigh - Macquarie Research

Got it. And then how long do they come in -- is that kind of a 5-year -- did they come in over how much time frame, that $115 million?

Frank D. Martell

It's over 10 years.

Kevin D. McVeigh - Macquarie Research

10 years. And then just my last question. With the boost to the buyback, does that impact your current '13 guidance at all? I mean, you've taken it up a fair amount, number one. And then number two, is there any blackout period on that? Or just obviously with the transaction, are you restricted at any point from buying stock?

Frank D. Martell

Yes. So we are in blackout, obviously. We've been for a little while, essentially since the end of the first quarter, and we'll be in blackout through the earnings cycle coming up in the end of July. So that covers that point. And then I think in terms of guidance, as Dan mentioned, we will re-guide on the call. Obviously, we need to close the transaction. We think it's going to be mid-third quarter, and then we'll true-up the guidance if necessary. But I think the guidance has a couple of components. One is the CoreLogic standalone company and how the company is doing there and then this deal. So we feel good about the deal and where we're headed. So we'll provide additional insight as we get in that call, and you guys can see what the second quarter results are.

Operator

Your next question comes from the line of Carter Malloy from Stephens.

Carter Malloy - Stephens Inc., Research Division

So on the last one, Frank, are you guys also going to begin discussing, at least from a bigger picture standpoint, your '14 outlook as well on the next call or are we going to be sticking to the '13 guidance?

Frank D. Martell

Sticking to the '13 guidance.

Carter Malloy - Stephens Inc., Research Division

Okay. And then on the historic growth rates of these businesses, you said mid-single digits. Is that across both assets or has one been more volatile than the other? And ultimately, can you help us get a sense of market sensitivity, especially for DataQuick?

Frank D. Martell

Yes, I think -- I'd say there's been a relatively small amount of volatility in the core operations of these companies over a long period of time. So they've been steady growers, I think, through kind of thick and thin. And so I think that's -- I wouldn't characterize either one of them as being particularly volatile or dissimilar in their growth rates. I think as I mentioned, some years have been stronger than mid-single digits, but I think I'd characterize it, if you want, just the historical continual mid-single digit, as a good kind of frame of reference. Our goal and our objective and we think fairly confidently that we can accelerate that growth to the integration. That's really one of the key factors that decided why we would do this deal. So we feel pretty good about the upside potential, but just got to get into it more -- work a little bit more on the details.

Carter Malloy - Stephens Inc., Research Division

Okay. And then what does this do from market share of you guys, both on the AVM side where I assume you have pretty meaningful market share, but then also the insurance sort of partial information and geospatial information.

Frank D. Martell

Well, I'd say it's hard to give you kind of a market share percentage because as Anand mentioned, these assets are complementary, but they're not necessarily playing exactly the same on the insurance side. But I'd say suffice it to say that our insurance revenues kind of hit the $100 million mark on a pro forma basis with this acquisition. So if you're looking at insurance as a proportion of both Data & Analytics segment and the total company, it's now become a meaningful proportion. Obviously, it's not as cyclical as the real estate piece of the business. So we like that a lot, and it's a very steady business. And then I think the other phenomenon similar to it, I think, mortgage and some of the other areas in real estate and property information is that from an insurance perspective, as Anand mentioned, there's an adoption going on of more analytics, more data and more workflow tool. So we think we'll benefit from that as it goes forward. But that's the adoption curve that we're seeing in things like fraud analytics on the mortgage side.

Carter Malloy - Stephens Inc., Research Division

And then on the mortgage side as well in terms of just the AVM gains you guys have as well, are you now the majority or over ruling majority player within that market?

Frank D. Martell

We believe we're a strong market leader in that area. I mean, the AVM -- historically and the AVMs have -- and also the credit and the flood zone determination are all really complementary to our existing businesses. And from an accretion standpoint and synergistic standpoint, those are all strong value creators for us. So those will be bolted on to existing structure of the company and synergized forth with.

Operator

[Operator Instructions] Your next question comes from the line of Brandon Dobell from William Blair.

Brandon Burke Dobell - William Blair & Company L.L.C., Research Division

Maybe talk a little bit about, I guess, the insurance company customer overlap. You mentioned the good penetration that these guys have in the insurance business. How many of those customers are you both going to share? I guess I'm trying to get at how easy the kind of cross-sell opportunities would be or do they have a lot of customers that you guys don't have on the insurance side or vice versa?

Anand K. Nallathambi

Yes, Brandon, I'll take that question. If you really look at it, MSB, like I mentioned, has a greater penetration of the top tier. And if you look at our geospatial and CDS Mapping acquisition especially, they're in the lower tiers. I mean, the concentration was more on the lower tier. So it's a complementary stack of clients that we're excited about cross-selling our services.

Brandon Burke Dobell - William Blair & Company L.L.C., Research Division

Okay. How does this impact or does it impact how you guys think about the TTI process, the amount of money that you have to put up, upfront to kind of get things squared away, the potential cost saves on the back end? Or has it changed the process timing for TTI?

Frank D. Martell

No, no, it's not a meaningful impact on TTI.

Unidentified Analyst

Okay. Any international revenues within DataQuick or MSB?

Frank D. Martell

A little bit in Canada. It's not material.

Brandon Burke Dobell - William Blair & Company L.L.C., Research Division

Okay. I didn't think it was. I just want to make sure. And then I just want to make sure I understood the cost synergies. You said the $7 million was kind of stuff you've already taken into account, but the chance for bigger numbers down the line seems reasonable. Is that just platform consolidation? Is it people, offices? I guess trying to get a better idea how that might play out.

Frank D. Martell

Yes, so the immediate synergy number is all the things you just mentioned at the end of your comment. So it's the normal people, facilities, so on and so forth, the overlap in the infrastructure of the company. Going forward, though, I would characterize the opportunity more so on the revenue side than on the cost side just because MSB itself is a fairly self-contained standalone with not a lot of overlap from a product and service delivery perspective. And so I think going forward, it's more of a revenue game. Currently, it's more of a cost game. And I think that $7 million, by the way, is a net number, net of cost to get. So once we -- the run rate of that will be greater, slightly greater as we go forward once we clear the cost.

Brandon Burke Dobell - William Blair & Company L.L.C., Research Division

Got it, okay. And then final one for me. You talked about the level of subscription revenue within MSB. Safe to assume that DataQuick is probably a little less than that just given the types of information they provide. So it's not 85% like MSB but something lower from a subscription point of view.

Frank D. Martell

It's slightly lower but not a lot. We love this -- the business model of these businesses are fantastic. They're really sticky, long-term subscription based.

Operator

Your next question comes from the line of Geoffrey Dunn from Dowling & Partners.

Geoffrey M. Dunn - Dowling & Partners Securities, LLC

As we think about the pro forma debt position of the company, does 2014 become more of a directing free cash flow towards retiring the debt and getting back down to a 2x debt level? But do you think you'll be able to still pursue a fair amount of share repurchase as well assuming the share price you guys are selling?

Frank D. Martell

We expect to continue to do aggressive return of capital to shareholders. So this will not impact our share repurchase program and targets, Geoff, from a capital structure perspective. 2.5x is really a comfortable number for us. We're going to be a bigger EBITDA base, obviously, and we feel good about that. But having said that, I think that will draw down the debt. That's the current plan in '14 progressively, but we feel great that the 2 to 2.5 range is a very prudent number to target over the long term, and we plan to be in the lower end by the time we get out of '14.

Operator

Ladies and gentlemen, that concludes the Q&A portion of the conference. That also concludes the call. Thank you for your participation. You may now disconnect. Have a great day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: CoreLogic's CEO Hosts Acquisition of Marshall & Swift/Boeckh and DataQuick Information Systems Conference (Transcript)
This Transcript
All Transcripts