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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 Margin of 16.5%

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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.

  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
June 30, 2013

 

Three Months Ended

June 30, 2012

Total revenue

$2,279

$1,727

Net earnings attributable to common shareholders

$139*

$147**

Net earnings per diluted share attributable to common shareholders

$0.61*

$0.65**

Cash flow from operations

$253

$238


Six Months Ended   
June 30, 2013

Six Months Ended

June 30, 2012

Total revenue

$4,320

$2,907

Net earnings attributable to common shareholders

$228*

$221**

Net earnings per diluted share attributable to common shareholders

$0.99*

$0.99**

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
June 30, 2013

Three Months Ended
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   
June 30, 2013

 

Six Months Ended
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%




 

Month

Direct Orders Opened

Direct Orders Closed

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
Commercial
Orders

Closed
Commercial
Orders

Commercial
Revenue
(millions)

Commercial
Fee Per File

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
June 30, 2013

Three Months Ended
(Partial)
June 30, 2012***

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

 June 30, 2013

Six Months Ended
(Partial)
June 30, 2012***

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 severance

$11


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, respectively)

241


--


481


--

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 before taxes

223


219


360


322

Income tax expense

72


81


118


118

Earnings from continuing operations before equity investments

151


138


242


204

Earnings from equity investments

(3)


2


(6)


8

Net earnings from continuing operations

148


140


236


212

Income from discontinued operations, net of tax

(2)


7


(2)


12

 Net earnings

146


147


234


224

Non-controlling interests

7


--


6


3

Net earnings attributable to common shareholders

$139


$147


$228


$221

Earnings per share:








      Net earnings attributable to common shareholders - basic

$0.62


$0.67


$1.01


$1.01

      Net earnings attributable to common shareholders -diluted

$0.61


$0.65


$0.99


$0.99

   

Weighted average shares – basic

225


220


225


219

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  

June 30, 2013

   Consolidated

FNT

Restaurant
Group

Remy

 

   Corporate

   and Other


Gross operating revenue

$2,237

$1,571

$347

$284

$35









Interest and investment income

37

35

--

(1)

3


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 amortization

35

17

14

1

3


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 continuing operations

223

272

5

4

(58)









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  

June 30, 2012

   Consolidated

FNT

Restaurant
Group

Remy

 

   Corporate

   and Other


Gross operating revenue

$1,624

$1,355

253

--

$16









Interest and investment income

37

36

--

--

1


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 amortization

26

16

9

--

1


Title claim loss expense

77

77

--

--

--


Interest expense

16

--

1

--

15


  Total expenses

1,508

1,201

261

--

46


Pre-tax earnings from continuing operations

219

191

63

--

(35)









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  

June 30, 2013

   Consolidated

FNT

Restaurant
Group

Remy

 

   Corporate

   and Other


Gross operating revenue

$4,247

$2,915

$701

$568

$63









Interest and investment income

70

68

--

--

2


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 amortization

68

33

27

2

6


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 continuing operations

360

441

5

3

(89)









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  

June 30, 2012

   Consolidated

FNT

Restaurant
Group

Remy

 

   Corporate

   and Other


Gross operating revenue

$2,764

$2,482

253

--

$29


Interest and investment income

73

70

--

--

3


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 amortization

43

32

9

--

2


Title claim loss expense

131

131

--

--

--


Interest expense

31

--

1

--

30


  Total expenses

2,585

2,240

261

--

84


Pre-tax earnings from continuing operations

322

317

63

--

(58)









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.



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