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Fidelity National Financial, Inc. Reports Second Quarter 2013 EPS of $0.61, Adjusted EPS of $0.68 and Adjusted Pre-Tax Title



 Fidelity National Financial, Inc. Reports Second Quarter 2013 EPS of $0.61,
       Adjusted EPS of $0.68 and Adjusted Pre-Tax Title Margin of 16.5%

PR Newswire

JACKSONVILLE, Fla., Aug. 5, 2013

JACKSONVILLE, Fla., Aug. 5, 2013 /PRNewswire/ -- Fidelity National Financial,
Inc. (NYSE: FNF), a leading provider of title insurance, mortgage services and
diversified services, today reported operating results for the three-month and
six-month periods ended June 30, 2013.

  o Adjusted pre-tax title margin of 16.5% for the second quarter versus 14.5%
    in the second quarter of 2012, a 200 basis point, or 14%, increase over
    the prior year; best second quarter pre-tax title margin since 2003,
    resulting in 32% growth in adjusted pre-tax title earnings compared to the
    second quarter of 2012
  o Consolidated results include a one-time $20 million pre-tax charge related
    to an employment litigation lawsuit and $2.5 million of pre-tax expenses
    related to the announced signing of a definitive agreement to acquire
    Lender Processing Services, Inc. (NYSE: LPS); a combined $0.07 negative
    impact to fully diluted EPS for the second quarter
  o Open title orders of 672,000 for the second quarter, an increase of 5,000,
    or 1%, over the second quarter of 2012; open orders per day of 10,500 for
    the second quarter versus 10,400 open orders per day for the second
    quarter of 2012; 42% of second quarter open title orders were purchase
    related
  o Second quarter purchase orders opened and closed increased by 11% and 13%,
    respectively, versus the second quarter of 2012; July 2013 purchase orders
    opened and closed increased by 17% and 22%, respectively, versus July 2012
  o Second quarter commercial title revenue of $112 million, a 9% increase
    over the second quarter of 2012, driven by a 15% improvement in the
    commercial fee per file offset by a 6% decrease in closed orders; second
    quarter commercial orders opened were essentially flat with the prior year
    period
  o Overall second quarter average fee per file of $1,562, a 4% increase over
    the second quarter of 2012 and a 14% sequential increase from the first
    quarter of 2013
  o Restaurant group revenue of $347 million, adjusted EBITDA of $23 million,
    adjusted EBITDA margin of 6.7% and a pre-tax earnings of $5 million
  o Remy total revenue of $280 million, adjusted EBITDA of $31 million,
    adjusted EBITDA margin of 11.1% and pre-tax earnings of $4 million

   

Consolidated ($ in millions except per share amounts)
                                                             

                                        Three Months Ended  Three Months Ended
                                        June 30, 2013
                                                            June 30, 2012
Total revenue                           $2,279              $1,727
Net earnings attributable to common     $139*               $147**
shareholders
Net earnings per diluted share          $0.61*              $0.65**
attributable to common shareholders
Cash flow from operations               $253                $238
                                        Six Months Ended    Six Months Ended
                                        June 30, 2013
                                                            June 30, 2012
Total revenue                           $4,320              $2,907
Net earnings attributable to common     $228*               $221**
shareholders
Net earnings per diluted share          $0.99*              $0.99**
attributable to common shareholders
Cash flow from operations               $214                $193
*Second quarter 2013 results include a one-time $20 million pre-tax charge
related to an employment litigation
lawsuit and $2.5 million of pre-tax deal expenses related to the announced
acquisition of LPS for a combined $0.07
negative impact to fully diluted EPS; the six months ended June 30, 2013
results also include a $5 million pre-tax
charge related to closing of three J. Alexander's locations and one Max &
Erma's location and a $7 million executive
separation expense at Remy for a combined $0.03 negative impact to fully
diluted EPS
**Includes $29 million, or $0.13 per diluted share, in net gains, primarily
from the consolidations of O'Charley's and
American Blue Ribbon Holdings

 

The following are summary financial and operational results for the operating
segments of FNF for the three-month and six-month periods ended June 30, 2013
and 2012:

 

Fidelity National Title Group ("FNT") ($ in millions)
                             Three Months Ended   Three Months Ended
                             June 30, 2013        June 30, 2012
Total revenue                $1,613               $1,392
Pre-tax earnings             $272                 $191
Realized gains               $7                   $1
Claims recoupment impairment --                   $11
Adjusted pre-tax earnings    $265                 $201
Adjusted pre-tax margin      16.5%                14.5%
                                                   

                             Six Months Ended     Six Months Ended
                             June 30, 2013        June 30, 2012
Total revenue                $2,990               $2,557
Pre-tax earnings             $441                 $317
Realized gains               $7                   $5
Claims recoupment impairment --                   $11
Adjusted pre-tax earnings    $434                 $323
Adjusted pre-tax margin      14.5%                12.7%
 
                             Direct Orders Opened Direct Orders Closed
Month
April 2013                   244,000              170,000
May 2013                     240,000              175,000
June 2013                    188,000              159,000
Second Quarter 2013          672,000              504,000
April 2012                   202,000              150,000
May 2012                     228,000              156,000
June 2012                    237,000              153,000
Second Quarter 2012          667,000              459,000

                 Open       Closed     Commercial Commercial
                 Commercial Commercial Revenue    Fee Per File
                 Orders     Orders     (millions)
2nd Quarter 2013 20,300     12,300     $112       $9,100
2nd Quarter 2012 20,300     13,100     $103       $7,900

 

- The preceding table only includes commercial activity from FNF's commercial
offices in the national commercial division and does not attempt to capture
potential commercial activity in our local offices.

 

Restaurant Group ($ in millions)
                                                            Three Months Ended
                                                            (Partial)
                                         Three Months Ended June 30, 2012***
                                         June 30, 2013
Operating revenue                        $347               $253
Realized gains                           --                 $71
Total revenue                            $347               $324
Pre-tax earnings                         $5                 $63
Depreciation & amortization              $14                $9
Interest expense                         $2                 $1
EBITDA                                   $21                $73
Realized (gains)                         --                 ($71)
Transaction and integration costs        $2                 $10
Adjusted EBITDA                          $23                $12
Adjusted EBITDA margin                   6.7%               4.7%
                                          
                                                            Six Months Ended
                                         Six Months Ended   (Partial)
                                                            June 30, 2012***
                                          June 30, 2013
Operating revenue                        $701               $253
Realized gains (losses)                  ($2)               $71
Total revenue                            $699               $324
Pre-tax earnings                         $5                 $63
Depreciation & amortization              $27                $9
Interest expense                         $4                 $1
EBITDA                                   $36                $73
Realized (gains) losses                  $2                 ($71)
Transaction and integration costs        $4                 $10
Adjusted EBITDA                          $42                $12
Adjusted EBITDA margin                   6.0%               4.7%
 

***Includes period from May 11, 2012 to June 30, 2012
                                          
Remy ($ in millions)****
                                         Three Months Ended
                                         June 30, 2013
Operating revenue                        $284
Interest and investment income           ($1)
Realized losses                          ($3)
Total revenue                            $280
Pre-tax earnings                         $4
Depreciation & amortization              $19
Interest expense                         $3
EBITDA                                   $26
Realized losses                          $3
Stock compensation                       $2
Adjusted EBITDA                          $31
Adjusted EBITDA margin                   11.1%
                                          

                                         Six Months Ended
                                         June 30, 2013
Operating revenue                        $568
Realized losses                          ($3)
Total revenue                            $565
Pre-tax earnings                         $3
Depreciation & amortization              $38
Interest expense                         $10
EBITDA                                   $51
Realized losses                          $3
Stock compensation and executive         $11
severance
Adjusted EBITDA                          $65
Adjusted EBITDA margin                   11.4%
****Consolidation of Remy results began August 15, 2012

 

"The second quarter results continue to highlight the earnings power of our
title business," said Chief Executive Officer George P. Scanlon.  "With an
improving residential purchase market and strong refinance order closings, we
were able to generate a 16.5% pre-tax title margin, nearly equal to that of
full-year 2003 when adjusted for the difference in the provision for title
losses between the time periods.  In the second quarter, our residential
purchase orders opened grew by 11% versus the second quarter of 2012 and
closed purchase orders increased by 13% over the prior year.  In July 2013,
residential purchase orders opened increased by 17% and closed purchase orders
grew by 22% versus July 2012.  Our commercial title insurance business
continues to perform well, generating 9% revenue growth over a strong second
quarter of 2012.    

"While we remain encouraged by the performance in our commercial and
residential purchase businesses, the nearly 100 basis point increase in the
10-year treasury rate during the second quarter adversely impacted refinance
orders during June and July.  We have responded to that decline in open
refinance orders by reducing headcount by nearly 670 positions over the past
six weeks.  As we have consistently demonstrated in the past, we will closely
monitor productivity and operating metrics with discipline and adjust staffing
levels to current market volumes to mitigate the impact to earnings associated
with the transitioning market."

"We were excited to announce the signing of an agreement to acquire LPS during
the second quarter," said Chairman William P. Foley, II.  "This combination
will create a larger, broader, more diversified and recurring revenue base for
FNF.  We continue to work through the filing and approval processes toward an
expected fourth quarter 2013 transaction closing and look forward to creating
significant value for our shareholders through this strategic acquisition."

Conference Call

FNF will host a call with investors and analysts to discuss second quarter
2013 results on Tuesday, August 6, 2013, beginning at 10:00 a.m. Eastern
Time.  A live webcast of the conference call will be available on the Events
and Multimedia page of the FNF Investor Relations website at www.fnf.com.  The
conference call replay will be available via webcast through the FNF Investor
Relations website at www.fnf.com.  The telephone replay will be available from
12:00 p.m. Eastern Time on August 6, 2013, through August 15, 2013, by dialing
800-475-6701 (USA) or 320-365-3844 (International).  The access code will be
297732.

About FNF

Fidelity National Financial, Inc. (NYSE:FNF), is a leading provider of title
insurance, mortgage services and diversified services.  FNF is the nation's
largest title insurance company through its title insurance underwriters -
Fidelity National Title, Chicago Title, Commonwealth Land Title and Alamo
Title - that collectively issue more title insurance policies than any other
title company in the United States.  FNF owns a 55% stake in American Blue
Ribbon Holdings, LLC, a family and casual dining restaurant owner, operator
and franchisor of the O'Charley's, Ninety Nine Restaurant, Max & Erma's,
Village Inn, and Bakers Square concepts.  FNF also owns an 87% stake in J.
Alexander's, LLC, an upscale dining restaurant owner and operator of the J.
Alexander's and Stoney River Legendary Steaks concepts.  In addition, FNF also
owns a 51% stake in Remy International, Inc., a leading designer,
manufacturer, remanufacturer, marketer and distributor of aftermarket and
original equipment electrical components for automobiles, light trucks,
heavy-duty trucks and other vehicles.  FNF also owns a minority interest in
Ceridian Corporation, a leading provider of global human capital management
and payment solutions.  More information about FNF can be found at
www.fnf.com. 

Use of Non-GAAP Financial Information

Generally Accepted Accounting Principles (GAAP) is the term used to refer to
the standard framework of guidelines for financial accounting. GAAP includes
the standards, conventions, and rules accountants follow in recording and
summarizing transactions and in the preparation of financial statements. In
addition to reporting financial results in accordance with GAAP, the Company
has provided non-GAAP financial measures, which it believes are useful to help
investors better understand its financial performance, competitive position
and prospects for the future. These non-GAAP measures include earnings before
interest, taxes and depreciation and amortization (EBITDA) and adjusted
earnings before interest, taxes and depreciation and amortization (Adjusted
EBITDA).

Any non-GAAP measures should be considered in context with the GAAP financial
presentation and should not be considered in isolation or as a substitute for
GAAP net earnings. Further, FNF's non-GAAP measures may be calculated
differently from similarly titled measures of other companies. Reconciliations
of these non-GAAP measures to related GAAP measures are provided above.

Important Information Will be Filed with the SEC

FNF plans to file with the SEC a Registration Statement on Form S‑4 in
connection with the transaction.  FNF and LPS plan to file with the SEC and
mail to their respective stockholders a Joint Proxy Statement/Prospectus in
connection with the transaction. The Registration Statement and the Joint
Proxy Statement/Prospectus will contain important information about FNF, LPS,
the transaction and related matters.  Investors and security holders are urged
to read the Registration Statement and the JOINT Proxy Statement/Prospectus
carefully when they are available.

Investors and security holders will be able to obtain free copies of the
Registration Statement and the Joint Proxy Statement/Prospectus and other
documents filed with the SEC by FNF and LPS through the web site maintained by
the SEC at www.sec.gov or by phone, email or written request by contacting the
investor relations department of FNF or LPS at the following:

 

FNF                           LPS
601 Riverside Avenue          601 Riverside Avenue
Jacksonville, FL 32204        Jacksonville, FL 32204
Attention: Investor Relations Attention: Investor Relations
904-854-8100                  904-854-8640
dkmurphy@fnf.com              nancy.murphy@lpsvcs.com       

 

FNF and LPS, and their respective directors and executive officers, may be
deemed to be participants in the solicitation of proxies in respect of the
transactions contemplated by the merger agreement.  Information regarding the
directors and executive officers of FNF is contained in FNF's Form 10-K for
the year ended December 31, 2012 and its proxy statement filed on April 12,
2013, which are filed with the SEC.  Information regarding LPS's directors and
executive officers is contained in LPS's Form 10-K for the year ended December
31, 2012 and its proxy statement filed on April 9, 2013, which are filed with
the SEC.  A more complete description will be available in the Registration
Statement and the Joint Proxy Statement/Prospectus.

This communication shall not constitute an offer to sell or the solicitation
of an offer to sell or the solicitation of an offer to buy any securities, nor
shall there be any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction.  No offer of securities
shall be made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act of 1933, as amended.

Forward Looking Statements

This press release contains forward-looking statements that involve a number
of risks and uncertainties. Statements that are not historical facts,
including statements regarding expectations, hopes, intentions or strategies
regarding the future are forward-looking statements. Forward-looking
statements are based on FNF or LPS management's beliefs, as well as
assumptions made by, and information currently available to, them.  Because
such statements are based on expectations as to future financial and operating
results and are not statements of fact, actual results may differ materially
from those projected. FNF and LPS undertake no obligation to update any
forward-looking statements, whether as a result of new information, future
events or otherwise.  The risks and uncertainties which forward-looking
statements are subject to include, but are not limited to: the ability to
consummate the proposed transaction; the ability to obtain requisite
regulatory and stockholder approval and the satisfaction of other conditions
to the consummation of the proposed transaction; the ability of FNF to
successfully integrate LPS's operations and employees and realize anticipated
synergies and cost savings; the potential impact of the announcement or
consummation of the proposed transaction on relationships, including with
employees, suppliers, customers and competitors; changes in general economic,
business and political conditions, including changes in the financial markets;
weakness or adverse changes in the level of real estate activity, which may be
caused by, among other things, high or increasing interest rates, a limited
supply of mortgage funding or a weak U.S. economy; FNF's dependence on
distributions from its title insurance underwriters as a main source of cash
flow; significant competition that FNF and LPS face; compliance with extensive
government regulation; and other risks detailed in the "Statement Regarding
Forward-Looking Information," "Risk Factors" and other sections of FNF's and
LPS' Form 10-K and other filings with the Securities and Exchange Commission.

 

 

FIDELITY NATIONAL FINANCIAL, INC.

SUMMARY OF EARNINGS

(In millions, except order information in 000's)

(Unaudited)
                                          Three Months Ended  Six Months Ended
                                          June 30,            June 30,
                                          2013       2012     2013      2012
Direct title premiums                     $492       $426     $905      $779
Agency title premiums                     625        518      1,149     932
  Total title premiums                    1,117      944      2,054     1,711
Escrow, title-related and other fees      489        427      924       800
  Total title and escrow                  1,606      1,371    2,978     2,511
Restaurant revenue                        347        253      701       253
Remy revenue                              284        --       568       --
Interest and investment income            37         37       70        73
Realized gains and losses                 5          66       3         70
  Total revenue                           2,279      1,727    4,320     2.907
Personnel costs                           546        447      1,065     852
Other operating expenses                  366        331      691       601
Cost of restaurant revenue                295        215      597       215
Cost of Remy revenue (includes $18
million and $36 million of D&A,           241        --       481       --
respectively)
Agent commissions                         473        396      870       712
Depreciation and amortization             35         26       68        43
Title claim loss expense                  79         77       144       131
Interest expense                          21         16       44        31
  Total expenses                          2,056      1,508    3,960     2,585
Earnings from continuing operations       223        219      360       322
before taxes
Income tax expense                        72         81       118       118
Earnings from continuing operations       151        138      242       204
before equity investments
Earnings from equity investments          (3)        2        (6)       8
Net earnings from continuing operations   148        140      236       212
Income from discontinued operations, net  (2)        7        (2)       12
of tax
 Net earnings                             146        147      234       224
Non-controlling interests                 7          --       6         3
Net earnings attributable to common       $139       $147     $228      $221
shareholders
Earnings per share:
      Net earnings attributable to common $0.62      $0.67    $1.01     $1.01
shareholders - basic
      Net earnings attributable to common $0.61      $0.65    $0.99     $0.99
shareholders -diluted
   
                                          225        220      225       219
Weighted average shares – basic
Weighted average shares – diluted         229        225      230       224
Direct operations orders opened (000's)   672        667      1,315     1,318
Direct operations orders closed (000's)   504        459      991       868
Fee per file                              $1,562     $1,497   $1,469    $1,451
Actual title claims paid                  $108       $101     $199      $205

 

 

FIDELITY NATIONAL FINANCIAL, INC.

SECOND QUARTER SEGMENT INFORMATION

(In millions, except order information in 000's)

(Unaudited)
                                                                  
Three Months Ended                               Restaurant
                             Consolidated FNT    Group      Remy    Corporate
June 30, 2013
                                                                    and Other
Gross operating revenue   $2,237          $1,571 $347       $284 $35
Interest and investment   37              35     --         (1)  3
income
Realized gains and losses 5               7      --         (3)  1
  Total revenue           2,279           1,613  347        280  39
Personnel costs           546             481    16         19   30
Other operating expenses  366             291    15         12   48
Cost of revenue           536             --     295        241  --
Agent commissions         473             473    --         --   --
Depreciation and          35              17     14         1    3
amortization
Title claim loss expense  79              79     --         --   --
Interest expense          21              --     2          3    16
  Total expenses          2,056           1,341  342        276  97
Pre-tax earnings from     223             272    5          4    (58)
continuing operations
Pre-tax margin            9.8%            16.9%  1.4%       1.4% --
Adjusted pre-tax margin   9.6%            16.5%  1.4%       2.5% --
Open orders               672             672    --         --   --
Closed orders             504             504    --         --   --
                                                                  
Three Months Ended                               Restaurant
                             Consolidated FNT    Group      Remy    Corporate
June 30, 2012
                                                                    and Other
Gross operating revenue   $1,624          $1,355 253        --   $16
Interest and investment   37              36     --         --   1
income
Realized gains and losses 66              1      71         --   (6)
  Total revenue           1,727           1,392  324        --   11
Personnel costs           447             429    8          --   10
Other operating expenses  331             283    28         --   20
Cost of revenue           215                    215
Agent commissions         396             396    --         --   --
Depreciation and          26              16     9          --   1
amortization
Title claim loss expense  77              77     --         --   --
Interest expense          16              --     1          --   15
  Total expenses          1,508           1,201  261        --   46
Pre-tax earnings from     219             191    63         --   (35)
continuing operations
Pre-tax margin            12.7%           13.7%  19.4%      --   --
Adjusted pre-tax margin   9.2%            14.5%  --         --   --
Open orders               667             667    --         --   --
Closed orders             459             459    --         --   --

 

 

FIDELITY NATIONAL FINANCIAL, INC.

YTD SEGMENT INFORMATION

(In millions, except order information in 000's)

(Unaudited)
                                                                  
Six Months Ended                                 Restaurant
                             Consolidated FNT    Group      Remy    Corporate
June 30, 2013
                                                                    and Other
Gross operating revenue   $4,247          $2,915 $701       $568 $63
Interest and investment   70              68     --         --   2
income
Realized gains and losses 3               7      (2)        (3)  1
  Total revenue           4,320           2,990  699        565  66
Personnel costs           1,065           933    31         46   55
Other operating expenses  691             569    35         23   64
Cost of revenue           1,078           --     597        481  --
Agent commissions         870             870    --         --   --
Depreciation and          68              33     27         2    6
amortization
Title claim loss expense  144             144    --         --   --
Interest expense          44              --     4          10   30
  Total expenses          3,960           2,549  694        562  155
Pre-tax earnings from     360             441    5          3    (89)
continuing operations
Pre-tax margin            8.3%            14.7%  0.7%       0.5% --
Adjusted pre-tax margin   8.3%            14.5%  1.0%       1.1% --
Open orders               1,315           1,315  --         --   --
Closed orders             991             991    --         --   --
                                                                  
Six Months Ended                                 Restaurant
                             Consolidated FNT    Group      Remy    Corporate
June 30, 2012
                                                                    and Other
Gross operating revenue   $2,764          $2,482 253        --   $29
Interest and investment   73              70     --         --   3
income
Realized gains and losses 70              5      71         --   (6)
  Total revenue           2,907           2,557  324        --   26
Personnel costs           852             827    8          --   17
Other operating expenses  601             538    28         --   35
Cost of revenue           215             --     215
Agent commissions         712             712    --         --   --
Depreciation and          43              32     9          --   2
amortization
Title claim loss expense  131             131    --         --   --
Interest expense          31              --     1          --   30
  Total expenses          2,585           2,240  261        --   84
Pre-tax earnings from     322             317    63         --   (58)
continuing operations
Pre-tax margin            11.1%           12.4%  19.4%      --   --
Adjusted pre-tax margin   8.9%            12.7%  --         --   --
Open orders               1,318           1,318  --         --   --
Closed orders             868             868    --         --   --

 

 

FIDELITY NATIONAL FINANCIAL, INC.

SUMMARY BALANCE SHEET INFORMATION

(In millions, except per share amounts)
                                June 30,      December 31,
                                2013          2012
                                 (Unaudited)
Cash and investment portfolio   $5,266        $5,185
Goodwill                        1,883         1,908
Title plant                     374           374
Total assets                    10,015        9,903
Notes payable                   1,345         1,344
Reserve for title claim losses  1,717         1,748
Secured trust deposits          653           528
Total equity                    4,834         4,749
Book value per share            $21.18        $20.78

 

SOURCE Fidelity National Financial, Inc.

Website: http://www.fnf.com
Contact: Daniel Kennedy Murphy, Senior Vice President and Treasurer,
904-854-8120, dkmurphy@fnf.com
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