Lender Processing Services Reports Second Quarter 2013 Earnings

Adjusted EPS from continuing operations of $0.65 and free cash flow of $78 million

Aug 08, 2013, 16:31 ET from Lender Processing Services, Inc.

JACKSONVILLE, Fla., Aug. 8, 2013 /PRNewswire/ -- Lender Processing Services, Inc. (NYSE: LPS), a leading provider of integrated technology and services to the mortgage and real estate industries, today announced second quarter 2013 GAAP net earnings of $19.1 million, or $0.22 per diluted share, compared to a net loss of $37.9 million, or $0.45 per diluted share, in the prior year quarter. 

(Logo: http://photos.prnewswire.com/prnh/20120802/FL50731LOGO )

Second Quarter Highlights

  • Technology, Data & Analytics (TD&A) revenue increased 6% over the prior year
  • Adjusted EBITDA margin of 27%
  • GAAP EPS from continuing operations of $0.24, reflecting a charge totaling $0.39 per diluted share primarily for estimated legal and regulatory contingencies
  • Adjusted EPS from continuing operations of $0.65, excluding charge and reflecting add-back for purchase accounting amortization
  • Adjusted free cash flow of $78 million or $0.91 per diluted share

"LPS' solid second quarter operating results demonstrate our ongoing commitment to meeting our customers' technology and service needs in today's complex mortgage market," said Hugh Harris, president and chief executive officer of LPS. 

"LPS' positive performance reflects solid demand for Technology Data & Analytics solutions and strong Origination Services volumes as we benefitted from continued low interest rates and elevated refinance activity during most of the quarter," commented chief financial officer Tom Schilling. "As a result of rising mortgage interest rates late in the second quarter 2013, refinance volumes were negatively impacted in June and July.  We expect Origination Services revenue to decrease sequentially in the third quarter based on these trends.   As we have in prior market cycles, we will continue to rigorously manage expenses to reduce the impact of lower Origination and Default Services transaction volumes on profitability."

Second quarter 2013 revenue was $468.9 million, a decrease of 8.7% from the prior year quarter, due to lower Default Services revenue, partially offset by higher revenue in TD&A and Origination Services.  Second quarter 2013 GAAP operating income was $45.1 million, compared to an operating loss of $24.1 million in the prior year quarter.  Adjusted operating income in the second quarter 2013 was $98.4 million, a decrease of 18.3% from $120.4 million in the prior year quarter, primarily due to a decline in Default Services.   Second quarter 2013 adjusted net earnings from continuing operations were $0.65 per diluted share compared to $0.79 per diluted share in the prior year quarter. 

Adjusted results from continuing operations in the second quarter 2013 exclude a pre-tax charge of $53.3 million, or $0.39 per diluted share, including $0.35 per share for estimated legal and regulatory contingencies and $0.04 per share primarily for transaction costs associated with the pending merger with Fidelity National Financial, Inc. and severance costs resulting from cost reduction initiatives.  Adjusted results from continuing operations in the second quarter 2012 exclude a pre-tax charge of $144.5 million, or $1.19 per diluted share, for estimated legal and regulatory contingencies.  Adjusted net earnings from continuing operations also include an add-back for purchase accounting amortization of $0.01 per diluted share in the current quarter and $0.02 per diluted share in the second quarter 2012. 

Net cash provided by operating activities for the second quarter of 2013 was $104.0 million, compared to $127.8 million in the prior year period, while adjusted free cash flow for the second quarter of 2013 was $77.7 million, compared to $114.9 million in the prior year period.  On an adjusted basis, the decrease was primarily due to lower earnings and reduced contributions from working capital, primarily accounts receivable. Adjusted free cash flow is defined as net cash provided by operating activities minus certain non-recurring expenses and additions to property, equipment and computer software.   

The company ended the second quarter 2013 with cash of $142.5 million and credit facility availability of $398.1 million.  The legal and regulatory accrual was $88.6 million at the end of the second quarter 2013.

Technology, Data and Analytics (TD&A) Revenue for the second quarter increased 5.8% from the prior year to $194.0 million.  Revenue from Servicing Technology increased 5.4% primarily due to higher loan counts and revenue per loan.  Origination Technology revenue increased 14.7% primarily due to higher origination volumes and contributions from the LendingSpace platform acquired in July 2012.  Default Technology revenue decreased 1.8% reflecting lower foreclosure referral volumes and Data and Analytics revenue increased 13.3% primarily due to higher demand for loan products data and predictive analytics.  Adjusted operating income increased 6.5% to $59.6 million in the second quarter 2013 primarily due to increased operating leverage and favorable revenue mix. 

Transaction Services   Revenue for the second quarter decreased 16.8% from the prior year period to $274.9 million.  Origination Services revenue increased 4.4% to $157.4 million primarily as a result of higher refinance volumes due to historically low interest rates resulting in increased title, escrow and flood revenue.  Default Services revenue decreased 34.6% from the prior year period to $117.4 million primarily as a result of lower foreclosure activity reflecting a decline in seriously delinquent mortgages as the U.S. economy and housing market strengthened, delays in processing foreclosure volumes resulting from new regulatory requirements, as well as strategic actions to align risk and return resulting in the non-renewal of certain contracts.  Adjusted operating income was $51.1 million, a decrease of 33.3% from the prior year period primarily due to lower Default Services revenue and reduced operating leverage.   

Corporate and Other Adjusted net corporate expenses in the second quarter 2013 were $12.3 million, flat with the prior year period.      

Outlook Based on the current environment, the company expects third quarter 2013 revenue to be in the range of $415 million to $435 million and adjusted net earnings per diluted share from continuing operations to be in the range of $0.51 to $0.55.   The expected sequential decrease in revenue and net earnings per share is primarily a result of lower Origination Services revenue due to higher interest rates leading to a decline in refinance volumes.  

Merger Agreement On May 28, 2013, LPS and Fidelity National Financial, Inc. (NYSE: FNF) executed an Agreement and Plan of Merger pursuant to which LPS would be acquired by FNF. The agreement was approved by the Board of Directors and is subject to customary closing conditions. Those conditions include the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the approval of LPS and FNF stockholders and approvals from applicable federal and state regulators.

Conference Call Due to the pending acquisition by Fidelity National Financial, Inc., LPS will not host a conference call.

About Lender Processing Services LPS (NYSE: LPS) delivers comprehensive technology solutions and services, as well as powerful data and analytics, to the nation's top mortgage lenders, servicers and investors. As a proven and trusted partner with deep client relationships, LPS offers the only end-to-end suite of solutions that provides major U.S. banks and many federal government agencies the technology and data needed to support mortgage lending and servicing operations, meet unique regulatory and compliance requirements and mitigate risk. 

These integrated solutions support origination, servicing, portfolio retention and default servicing. LPS' servicing solutions include MSP, the industry's leading loan-servicing platform, which is used to service approximately 50 percent of all U.S. mortgages by dollar volume. The company also provides proprietary data and analytics for the mortgage, real estate and capital markets industries. Lender Processing Services is a Fortune 1000 company headquartered in Jacksonville, Fla.  For more information, please visit www.lpsvcs.com.

Use of Non-GAAP Financial Information U.S. 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, LPS reports several non-GAAP measures, including "EBITDA" (GAAP operating income plus depreciation and amortization); "EBITDA, as adjusted" (EBITDA adjusted for the impact of certain non-recurring adjustments, if applicable); "adjusted operating income" (GAAP operating income adjusted for the impact of certain non-recurring adjustments, if applicable); "adjusted net earnings" (GAAP net earnings adjusted for the impact of certain non-recurring adjustments, if applicable, plus the after-tax purchase price amortization of intangible assets added through acquisitions); "adjusted net earnings per diluted share" or "adjusted EPS per diluted share" (adjusted net earnings divided by diluted weighted average shares); and "adjusted free cash flow" (net cash provided by operating activities less additions to property, equipment and computer software, as well as non-recurring adjustments, if applicable). LPS provides these measures because it believes that they are helpful to investors in comparing year-over-year performance in light of certain non-recurring and other charges, and to better understand our financial performance, competitive position and future prospects.  Non-GAAP measures should be considered in conjunction with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP measures.  A reconciliation of these non-GAAP measures to related GAAP measures is included in the attachments to this release.

Forward-Looking Statements This press release contains forward-looking statements that involve a number of risks and uncertainties. Those forward-looking statements include all statements that are not historical facts, including statements about our beliefs and expectations. Forward-looking statements are based on management's beliefs, as well as assumptions made by and information currently available to management. Because such statements are based on expectations as to future economic performance and are not statements of historical fact, actual results may differ materially from those projected. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are the following: the ability to consummate the proposed transaction with Fidelity National Financial, Inc. ("FNF"); the ability to obtain requisite regulatory and stockholder approval and the satisfaction of other conditions to the consummation of the proposed transaction with FNF; the ability of FNF to successfully integrate LPS' 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; FNF and  LPS are subject to intense competition and increased competition is expected in the future; LPS' ability to adapt its services to changes in technology or the marketplace; the impact of changes in the level of real estate activity (including, among others, loan originations, and refinancings in particular, and foreclosures) on demand for certain of LPS' services; LPS' ability to maintain and grow its relationship with its customers; the effects of LPS' substantial leverage on its ability to make acquisitions and invest in its business; the level of scrutiny being placed on participants in the foreclosure business; risks associated with federal and state enforcement proceedings, inquiries and examinations currently underway or that may be commenced in the future with respect to LPS' default management operations, and with civil litigation relating to these matters; changes to the laws, rules and regulations that regulate LPS' businesses as a result of the current economic and financial environment; changes in general economic, business and political conditions, including changes in the financial markets; the impact of any potential defects, development delays, installation difficulties or system failures on LPS' business and reputation; and risks associated with protecting information security and privacy. Additional information concerning these and other factors can be found in LPS' filings with the Securities and Exchange Commission ("SEC"), including its most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.  LPS assumes no obligation to update the information in this communication, except as otherwise required by law.  Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof and LPS undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Exhibit A

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

Three months ended June 30,

Six months ended June 30,

2013

2012

2013

2012

(In thousands, except per share data)

Revenues

$        468,880

$         513,377

$         940,541

$         999,171

Expenses:

Operating expenses

343,841

369,513

690,000

738,187

Depreciation and amortization

26,652

23,453

52,726

47,367

Legal and regulatory charges

47,641

144,476

51,566

144,476

Exit costs, impairments and other charges

5,626

--

1,701

--

Total expenses

423,760

537,442

795,993

930,030

Operating income (loss)

45,120

(24,065)

144,548

69,141

Other income (expense):

Interest income

565

454

1,144

902

Interest expense

(13,083)

(16,455)

(26,597)

(32,857)

Other income, net

282

74

291

159

Total other income (expense)

(12,236)

(15,927)

(25,162)

(31,796)

Earnings (loss) from continuing operations before income taxes

32,884

(39,992)

119,386

37,345

Provision (benefit) for income taxes

12,162

(4,878)

44,168

23,968

Net earnings (loss) from continuing operations

20,722

(35,114)

75,218

13,377

Loss from discontinued operations, net of tax

(1,638)

(2,766)

(2,204)

(4,136)

Net earnings (loss)

$          19,084

$          (37,880)

$           73,014

$             9,241

Net earnings (loss) per share -- diluted from continuing operations

$              0.24

$              (0.42)

$               0.88

$               0.16

Net loss per share -- diluted from discontinued operations

(0.02)

(0.03)

(0.02)

(0.05)

Net earnings (loss) per share -- diluted

$              0.22

$              (0.45)

$               0.86

$               0.11

Weighted average shares outstanding -- diluted

85,560

84,578

85,359

84,680

 

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

June 30,

December 31,

2013

2012

(In thousands)

Assets

Current assets:

Cash and cash equivalents

$        142,490

$      236,241

Trade receivables, net of allowance for doubtful accounts

248,210

274,783

Other receivables

5,806

3,800

Income tax receivable

17,503

--

Prepaid expenses and other current assets

42,739

41,541

Deferred income taxes

88,213

127,742

Total current assets

544,961

684,107

Property and equipment, net

122,398

126,633

Computer software, net

262,431

245,271

Other intangible assets, net

20,161

23,670

Goodwill

1,109,304

1,109,304

Other non-current assets

279,322

256,849

Total assets

$     2,338,577

$   2,445,834

Liabilities and Stockholders' Equity

Current liabilities:

Current portion of long-term debt

$          26,750

$                --

Trade accounts payable

45,373

38,901

Accrued salaries and benefits

77,175

107,984

Legal and regulatory accrual

88,578

223,149

Other accrued liabilities

140,137

169,458

Deferred revenues

58,144

58,868

Total current liabilities

436,157

598,360

Deferred revenues

23,325

24,987

Deferred income taxes, net

194,314

174,303

Long-term debt, net of current portion

1,041,375

1,068,125

Other non-current liabilities

32,862

37,163

Total liabilities

1,728,033

1,902,938

Stockholders' equity:

Preferred stock $0.0001 par value; 50 million shares authorized, none issued

at June 30, 2013 and December 31, 2012

--

--

Common stock $0.0001 par value; 500 million shares authorized, 97.4 million

shares issued at June 30, 2013 and December 31, 2012

10

10

Additional paid-in capital

245,297

250,016

Retained earnings

749,876

694,148

Accumulated other comprehensive loss

(2,983)

(3,079)

Treasury stock at cost; 12.1 million and 12.5 million shares at June 30, 2013 and 

December 31, 2012, respectively

(381,656)

(398,199)

Total stockholders' equity

610,544

542,896

Total liabilities and stockholders' equity

$     2,338,577

$   2,445,834

 

Exhibit C

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Six months ended June 30,

2013

2012

(In thousands)

Cash flows from operating activities:

Net earnings

$          73,014

$            9,241

Adjustments to reconcile net earnings to net 

cash provided by operating activities:

Depreciation and amortization

52,710

48,889

Amortization of debt issuance costs

2,091

2,231

Asset impairment charges

785

3,688

Gain on sale of discontinued operations

--

(8,321)

Deferred income taxes, net

59,086

(15,415)

Stock-based compensation cost

13,653

12,348

Income tax effect of equity compensation

(533)

1,034

Changes in assets and liabilities, net of effects of acquisitions:

Trade receivables

26,484

26,911

Other receivables

(2,006)

(2,296)

Income tax receivable

(17,503)

--

Prepaid expenses and other assets

(10,847)

(14,053)

Deferred revenues

(2,385)

7,752

Accounts payable, accrued liabilities and other liabilities

(188,073)

145,877

Net cash provided by operating activities

6,476

217,886

Cash flows from investing activities:

Additions to property and equipment

(12,619)

(11,989)

Additions to capitalized software

(42,819)

(37,988)

Purchases of investments, net of proceeds from sales

(10,039)

(8,728)

Acquisition of title plants and property records data

(15,482)

(22,613)

Proceeds from sales of discontinued operations, net of cash distributed

--

18,706

Net cash used in investing activities

(80,959)

(62,612)

Cash flows from financing activities:

Debt service payments

--

(71,457)

Exercise of stock options and restricted stock vesting

(1,829)

(2,734)

Income tax effect of equity compensation

533

(1,034)

Dividends paid

(17,020)

(16,913)

Payment of contingent consideration related to acquisitions

(952)

(2,000)

Net cash used in financing activities

(19,268)

(94,138)

Net (decrease) increase in cash and cash equivalents

(93,751)

61,136

Cash and cash equivalents, beginning of period

236,241

77,355

Cash and cash equivalents, end of period

$        142,490

$        138,491

Supplemental disclosures of cash flow information:

Cash paid for interest

$          26,087

$          29,378

Cash paid for taxes

$            6,483

$          21,589

 

Exhibit D

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

SUPPLEMENTAL FINANCIAL INFORMATION -- UNAUDITED

(In thousands)

YEAR-TO-DATE

QUARTER

YEAR ENDED

Q2-2013

Q2-2012

Q2-2013

Q1-2013

Q4-2012

Q3-2012

Q2-2012

Q1-2012

12/31/2012

1.

Revenues -- Continuing Operations

Technology, Data and Analytics:

Technology

$  354,690

$  329,805

$  177,265

$  177,425

$  174,110

$  173,985

$  168,515

$  161,290

$     677,900

Servicing Technology

232,931

219,635

117,264

115,667

114,818

111,572

111,284

108,351

446,025

Default Technology

70,048

65,627

33,425

36,623

34,762

36,163

34,051

31,576

136,552

Origination Technology

51,711

44,543

26,576

25,135

24,530

26,250

23,180

21,363

95,323

Data and Analytics

32,940

28,794

16,735

16,205

15,202

15,009

14,767

14,027

59,005

Total

387,630

358,599

194,000

193,630

189,312

188,994

183,282

175,317

736,905

Transaction Services:

Origination Services

321,858

297,491

157,433

164,425

173,934

154,057

150,741

146,750

625,482

Default Services

230,988

345,079

117,427

113,561

137,783

154,394

179,618

165,461

637,256

Total

552,846

642,570

274,860

277,986

311,717

308,451

330,359

312,211

1,262,738

Corporate

65

(1,998)

20

45

--

6

(264)

(1,734)

(1,992)

Total Revenue

$  940,541

$  999,171

$  468,880

$  471,661

$  501,029

$  497,451

$  513,377

$  485,794

$  1,997,651

Revenue Growth from Prior Year Period

Technology, Data and Analytics:

Technology

7.5%

8.5%

5.2%

10.0%

8.0%

11.2%

10.4%

6.6%

9.1%

Servicing Technology

6.1%

6.1%

5.4%

6.8%

7.2%

4.0%

7.3%

4.9%

5.9%

Default Technology

6.7%

12.5%

-1.8%

16.0%

3.0%

28.3%

16.6%

8.3%

13.5%

Origination Technology

16.1%

15.4%

14.7%

17.7%

20.3%

25.3%

17.1%

13.7%

19.2%

Data and Analytics

14.4%

-3.4%

13.3%

15.5%

6.3%

7.8%

-2.6%

-4.2%

1.7%

Total

8.1%

7.5%

5.8%

10.4%

7.8%

11.0%

9.2%

5.7%

8.4%

Transaction Services:

Origination Services

8.2%

26.7%

4.4%

12.0%

14.8%

15.7%

42.4%

13.8%

20.4%

Default Services

-33.1%

-16.1%

-34.6%

-31.4%

-26.0%

-19.9%

-9.4%

-22.4%

-19.4%

Total

-14.0%

-0.6%

-16.8%

-11.0%

-7.7%

-5.3%

8.6%

-8.8%

-3.6%

Corporate

n/m

n/m

n/m

n/m

n/m

n/m

n/m

n/m

n/m

Total Revenue

-5.9%

2.3%

-8.7%

-2.9%

-2.1%

0.6%

9.1%

-4.1%

0.7%

Revenue Growth from Sequential Period

Technology, Data and Analytics:

Technology

7.5%

8.5%

-0.1%

1.9%

0.1%

3.2%

4.5%

0.0%

9.1%

Servicing Technology

6.1%

6.1%

1.4%

0.7%

2.9%

0.3%

2.7%

1.2%

5.9%

Default Technology

6.7%

12.5%

-8.7%

5.4%

-3.9%

6.2%

7.8%

-6.4%

13.5%

Origination Technology

16.1%

15.4%

5.7%

2.5%

-6.6%

13.2%

8.5%

4.7%

19.2%

Data and Analytics

14.4%

-3.4%

3.3%

6.6%

1.3%

1.6%

5.3%

-1.9%

1.7%

Total

8.1%

7.5%

0.2%

2.3%

0.2%

3.1%

4.5%

-0.1%

8.4%

Transaction Services:

Origination Services

8.2%

26.7%

-4.3%

-5.5%

12.9%

2.2%

2.7%

-3.2%

20.4%

Default Services

-33.1%

-16.1%

3.4%

-17.6%

-10.8%

-14.0%

8.6%

-11.2%

-19.4%

Total

-14.0%

-0.6%

-1.1%

-10.8%

1.1%

-6.6%

5.8%

-7.6%

-3.6%

Corporate

n/m

n/m

n/m

n/m

n/m

n/m

n/m

n/m

n/m

Total Revenue

-5.9%

2.3%

-0.6%

-5.9%

0.7%

-3.1%

5.7%

-5.1%

0.7%

 

Exhibit E

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

NON-GAAP FINANCIAL INFORMATION -- UNAUDITED

(In thousands, except per share data)

YEAR-TO-DATE

QUARTER

YEAR ENDED

Q2-2013

Q2-2012

Q2-2013

Q1-2013

Q4-2012

Q3-2012

Q2-2012

Q1-2012

12/31/2012

1.

Operating Results -- Continuing Operations

Consolidated

Revenues

$      940,541

$    999,171

$     468,880

$      471,661

$    501,029

$      497,451

$      513,377

$      485,794

$   1,997,651

Operating Income (Loss), as reported

144,548

69,141

45,120

99,428

51,935

111,859

(24,065)

93,206

232,935

Adjustments:

Legal, Regulatory and Other Charges (1)

53,267

144,476

53,267

--

58,401

--

144,476

--

202,877

Operating Income, as adjusted

197,815

213,617

98,387

99,428

110,336

111,859

120,411

93,206

435,812

Depreciation and Amortization

52,726

47,367

26,652

26,074

25,136

24,241

23,453

23,914

96,744

EBITDA, as adjusted

$      250,541

$    260,984

$     125,039

$      125,502

$    135,472

$      136,100

$      143,864

$      117,120

$      532,556

Operating Margin, as adjusted

21.0%

21.4%

21.0%

21.1%

22.0%

22.5%

23.5%

19.2%

21.8%

EBITDA Margin, as adjusted

26.6%

26.1%

26.7%

26.6%

27.0%

27.4%

28.0%

24.1%

26.7%

Technology, Data and Analytics

Revenues

$      387,630

$    358,599

$     194,000

$      193,630

$    189,312

$      188,994

$      183,282

$      175,317

$      736,905

Operating Income, as reported

119,710

108,078

59,506

60,204

51,971

58,318

56,003

52,075

218,367

Adjustments:

Legal, Regulatory and Other Charges (1)

115

--

115

--

2,827

--

--

--

2,827

Operating Income, as adjusted

119,825

108,078

59,621

60,204

54,798

58,318

56,003

52,075

221,194

Depreciation and Amortization

41,212

36,543

20,880

20,332

19,730

18,726

17,997

18,546

74,999

EBITDA, as adjusted

$      161,037

$    144,621

$       80,501

$        80,536

$      74,528

$        77,044

$        74,000

$        70,621

$      296,193

Operating Margin, as adjusted

30.9%

30.1%

30.7%

31.1%

28.9%

30.9%

30.6%

29.7%

30.0%

EBITDA Margin, as adjusted

41.5%

40.3%

41.5%

41.6%

39.4%

40.8%

40.4%

40.3%

40.2%

Transaction Services

Revenues

$      552,846

$    642,570

$     274,860

$      277,986

$    311,717

$      308,451

$      330,359

$      312,211

$   1,262,738

Operating Income, as reported

101,033

128,853

50,516

50,517

65,892

65,651

76,603

52,250

260,396

Adjustments:

Legal, Regulatory and Other Charges (1)

575

--

575

--

1,531

--

--

--

1,531

Operating Income, as adjusted

101,608

128,853

51,091

50,517

67,423

65,651

76,603

52,250

261,927

Depreciation and Amortization

9,702

8,808

4,842

4,860

4,498

4,531

4,408

4,400

17,837

EBITDA, as adjusted

$      111,310

$    137,661

$       55,933

$        55,377

$      71,921

$        70,182

$        81,011

$        56,650

$      279,764

Operating Margin, as adjusted

18.4%

20.1%

18.6%

18.2%

21.6%

21.3%

23.2%

16.7%

20.7%

EBITDA Margin, as adjusted

20.1%

21.4%

20.3%

19.9%

23.1%

22.8%

24.5%

18.1%

22.2%

Corporate and Other

Revenues

$               65

$      (1,998)

$              20

$              45

$              --

$                 6

$           (264)

$        (1,734)

$        (1,992)

Operating Loss, as reported

(76,195)

(167,790)

(64,902)

(11,293)

(65,928)

(12,110)

(156,671)

(11,119)

(245,828)

Adjustments:

Legal, Regulatory and Other Charges (1)

52,577

144,476

52,577

--

54,043

--

144,476

--

198,519

Operating Loss, as adjusted

(23,618)

(23,314)

(12,325)

(11,293)

(11,885)

(12,110)

(12,195)

(11,119)

(47,309)

Depreciation and Amortization

1,812

2,016

930

882

908

984

1,048

968

3,908

EBITDA, as adjusted

$       (21,806)

$    (21,298)

$     (11,395)

$      (10,411)

$     (10,977)

$       (11,126)

$       (11,147)

$      (10,151)

$      (43,401)

 

Exhibit E - Continued

LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES

NON-GAAP FINANCIAL INFORMATION -- UNAUDITED

(In thousands, except per share data)

YEAR-TO-DATE

QUARTER

YEAR ENDED

Q2-2013

Q2-2012

Q2-2013

Q1-2013

Q4-2012

Q3-2012

Q2-2012

Q1-2012

12/31/2012

2.

Net Earnings -- Reconciliation

Net Earnings (Loss)

$         73,014

$        9,241

$        19,084

$        53,930

$        2,814

$        58,304

$       (37,880)

$        47,121

$        70,359

Adjustments -- Continuing Operations:

Legal, Regulatory and Other Charges, net (1)

33,559

100,624

33,559

--

34,676

--

100,624

--

135,300

Total Adjustments to Continuing Operations

33,559

100,624

33,559

--

34,676

--

100,624

--

135,300

Adjustments -- Discontinued Operations:

Impairment, Restructuring and Disposal Charges, net

1,079

--

1,079

--

2,494

--

--

--

2,494

Total Adjustments to Discontinued Operations

1,079

--

1,079

--

2,494

--

--

--

2,494

Adjustments -- Non-operating:

Debt Refinancing Charges, net (2)

--

--

--

--

15,445

--

--

--

15,445

Income Tax Adjustments (3)

--

--

--

--

5,621

--

--

--

5,621

Total Non-operating Adjustments

--

--

--

--

21,066

--

--

--

21,066

Net Earnings, as adjusted

107,652

109,865

53,722

53,930

61,050

58,304

62,744

47,121

229,219

Purchase Accounting Amortization, net (4)

2,479

4,154

912

1,567

1,712

1,712

1,733

2,421

7,578

Adjusted Net Earnings

$       110,131

$    114,019

$        54,634

$        55,497

$      62,762

$        60,016

$        64,477

$        49,542

$      236,797

Adjusted EPS -- Continuing Operations

$             1.31

$          1.39

$            0.65

$            0.66

$          0.74

$            0.72

$            0.79

$            0.60

$            2.85

Adjusted EPS -- Discontined Operations

(0.02)

(0.04)

(0.01)

(0.01)

--

(0.01)

(0.03)

(0.01)

(0.05)

Adjusted EPS -- Consolidated

$             1.29

$          1.35

$            0.64

$            0.65

$          0.74

$            0.71

$            0.76

$            0.59

$            2.80

Diluted Weighted Average Shares

85,359

84,680

85,560

85,144

85,106

84,948

84,578

84,567

84,857

3.

Cash Flow -- Reconciliation

Cash Flows from Operating Activities:

Net Earnings (Loss)

$         73,014

$        9,241

$        19,084

$        53,930

$        2,814

$        58,304

$       (37,880)

$        47,121

$        70,359

Adjustments to reconcile net earnings to

net cash provided by operating activities:

Non-cash adjustments

127,792

44,454

37,379

90,413

24,978

49,196

7,022

37,432

118,628

Working capital adjustments

(194,330)

164,191

47,554

(241,884)

103,100

(21,816)

158,693

5,498

245,475

Net cash provided by (used in) operating activities

6,476

217,886

104,017

(97,541)

130,892

85,684

127,835

90,051

434,462

Capital expenditures included in investing activities

(55,438)

(49,977)

(27,298)

(28,140)

(41,131)

(22,220)

(26,258)

(23,719)

(113,328)

Free Cash Flow

(48,962)

167,909

76,719

(125,681)

89,761

63,464

101,577

66,332

321,134

Payment of Legal, Regulatory and Other Charges, net (5)

176,132

15,688

947

175,185

2,491

5,746

13,335

2,353

23,925

Adjusted Free Cash Flow

$       127,170

$    183,597

$        77,666

$        49,504

$      92,252

$        69,210

$      114,912

$        68,685

$      345,059

Adjusted Free Cash Flow Per Diluted Share

$             1.49

$          2.17

$            0.91

$            0.58

$          1.08

$            0.82

$            1.36

$            0.81

$            4.07

Diluted Weighted Average Shares

85,359

84,680

85,560

85,144

85,106

84,948

84,578

84,567

84,857

Notes:

(1)

Reflects the impact of charges taken for various legal and regulatory matters, costs associated with the pending merger with Fidelity National Financial, Inc., and asset and facility lease impairment charges.

(2)

Charge related to the refinancing of our bonds and senior credit facilities during 2012.

(3)

Reflects the impact of favorable tax true-ups from fiscal 2011 recognized in 2012 offset by non-cash adjustments related to equity forfeitures from severance and restructuring initiatives.

(4)

Purchase accounting amortization, net represents the periodic amortization of intangible assets acquired through business acquisitions primarily relating to customer lists, trademarks and non-compete agreements.

(5)

Reflects the impact of payments, less applicable taxes, for adjustments included in item 2. "Net Earnings - Reconciliation" of the GAAP to non-GAAP reconciliation.

SOURCE Lender Processing Services, Inc.



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