Fidelity National Financial, Inc.

Fidelity National Financial, Inc.

Press Release

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May 02, 2018

FNF Reports First Quarter 2018 Diluted EPS of $0.35 and Adjusted Diluted EPS of $0.42, Pre-Tax Title Margin of 10.3% and Adjusted Pre-Tax Title Margin of 11.7%

JACKSONVILLE, Fla., May 2, 2018 /PRNewswire/ -- Fidelity National Financial, Inc. (NYSE:FNF), a leading provider of title insurance and transaction services to the real estate and mortgage industries, today reported operating results for the three-month period ended March 31, 2018.

  • Total revenue of approximately $1.7 billion in the first quarter versus $1.6 billion in the first quarter of 2017
  • First quarter net earnings of $97 million and adjusted net earnings of $118 million versus net earnings from continuing operations of $61 million and adjusted net earnings from continuing operations of $99 million for the first quarter of 2017
  • First quarter diluted EPS of $0.35 and adjusted diluted EPS of $0.42 versus diluted EPS from continuing operations of $0.22 and adjusted diluted EPS from continuing operations of $0.35 in the first quarter of 2017

Title

  • Total revenue of approximately $1.6 billion versus approximately $1.6 billion in total revenue in the first quarter of 2017
  • Pre-tax earnings of $163 million and adjusted pre-tax earnings of $186 million versus pre-tax earnings of $151 million and adjusted pre-tax earnings of $175 million in the first quarter of 2017
  • Pre-tax title margin of 10.3% and adjusted pre-tax title margin of 11.7% versus pre-tax title margin of 9.6% and adjusted pre-tax title margin of 11.1% in the first quarter of 2017
  • First quarter purchase orders opened and closed increased by 4% and decreased by 1%, respectively, versus the first quarter of 2017
  • Total commercial revenue of $230 million, a 3% increase over total commercial revenue in the first quarter of  2017, driven by a 5% increase in closed orders and a 3% decline in total commercial fee per file; first quarter total commercial open orders increased 7% compared to the prior year
  • Overall first quarter average fee per file of $2,344, a 9% increase versus the first quarter of 2017

Title Orders




Direct Orders Opened *



Direct Orders Closed *

Month


 / (% Purchase)


 / (% Purchase)

January 2018



158,000

62%



101,000

58%

February 2018



148,000

66%



96,000

62%

March 2018



172,000

69%



116,000

66%








First Quarter 2018



478,000

66%



313,000

62%








 




Direct Orders Opened *



Direct Orders Closed *

Month


 / (% Purchase)



 / (% Purchase)

January 2017



144,000

62%



112,000

53%

February 2017



145,000

64%



99,000

57%

March 2017



183,000

65%



123,000

64%








First Quarter 2017



472,000

64%



334,000

58%










* Includes an immaterial number of non-purchase and non-refinance orders

 



Open



Closed



Commercial






Commercial



Commercial



Revenue



Commercial



Orders



Orders



(In millions)



Fee Per File

First Quarter 2018 - Total Commercial



52,800




31,500




$230




$7,300

First Quarter 2017 - Total Commercial



49,400




30,000




$224




$7,500

 

"The first quarter was a solid start to the year for our title business, as we grew adjusted pre-tax title earnings by $11 million versus the first quarter of 2017 and produced an 11.7% adjusted pre-tax title margin, a 60 basis point improvement over the prior year," said Chairman William P. Foley, II.  "We feel our title business is well positioned as we enter the seasonally stronger spring and summer months.

"In January, our board decided to raise our first quarter 2018 cash dividend to $0.30 per share, an 11% increase from the fourth quarter 2017 dividend of $0.27, which itself was an 8% increase from our third quarter 2017 dividend of $0.25.  We continue to seek ways to maximize the return of value to our shareholders.

"In March, we announced the acquisition of Stewart Information Services.  Since that announcement, we have begun the regulatory process necessary to get the deal approved.  There are a number of state and federal filings needed, but the two major filings are the HSR Antitrust filing and the Form A filings with the states of Texas and New York, as those are the states of domicile for the two major Stewart underwriters.  We made the initial HSR filing on March 30, 2018, and will work through the anticipated information requests over the coming months.  We filed the Form A's with Texas and New York on April 27, 2018, and will wait for any feedback or information requests from those states.

"Also, over the last six weeks or so, our management and Stewart management have held more than twenty town hall style meetings for Stewart employees at locations around the country.  At those employee meetings, we reiterated our intent to preserve the Stewart legacy as a part of our long-time, successful strategy of operating multiple title insurance brands under the FNF umbrella.  The meetings were well received and we consistently heard the employee excitement of putting the prolonged uncertainty that has existed at Stewart behind them and a desire to getting back to a focus on their customers and growing their brand."

Conference Call
We will host a call with investors and analysts to discuss first quarter 2018 FNF results on Thursday, May 3, 2018, beginning at 1:30 p.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 fnf.com.  The conference call replay will be available via webcast through the FNF Investor Relations website at fnf.com.  The telephone replay will be available from 3:30 p.m. Eastern time on May 3, 2018, through May 10, 2018, by dialing 800-475-6701 (USA) or 320-365-3844 (International).  The access code will be 447137.

About Fidelity National Financial, Inc.
Fidelity National Financial, Inc. (NYSE: FNF) is a leading provider of title insurance and transaction services to the real estate and mortgage industries.  FNF is the nation's largest title insurance company through its title insurance underwriters - Fidelity National Title, Chicago Title, Commonwealth Land Title, Alamo Title and National Title of New York - that collectively issue more title insurance policies than any other title company in the United States.  More information about FNF can be found at 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, FNF 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 adjusted pre-tax earnings, adjusted pre-tax earnings from continuing operations, adjusted pre-tax earnings as a percentage of adjusted revenue (adjusted pre-tax title margin), adjusted pre-tax earnings from continuing operations as a percentage of adjusted revenue (adjusted pre-tax title margin from continuing operations). adjusted net earnings, adjusted net earnings from continuing operations, adjusted EPS and adjusted EPS from continuing operations.

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 below.

Forward-Looking Statements and Risk Factors
This press release contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements regarding our expectations, hopes, intentions or strategies regarding the future are forward-looking statements. 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 financial and operating results and are not statements of fact, actual results may differ materially from those projected. We 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: 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; our potential inability to find suitable acquisition candidates; our dependence on distributions from our title insurance underwriters as a main source of cash flow; significant competition that our operating subsidiaries face; compliance with extensive government regulation of our operating subsidiaries; the risk that Stewart Information Services Corporation ("Stewart") stockholders may not adopt the merger agreement; the risk that the necessary regulatory approvals may not be obtained or may be obtained subject to conditions that are not anticipated;  risks that any of the closing conditions to the proposed merger may not be satisfied in a timely manner; the risk that the businesses will not be integrated successfully, that such integration may be more difficult, time-consuming or costly than expected or that the expected benefits of the acquisition will not be realized; and other risks detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of FNF's Form 10-K and other filings with the Securities and Exchange Commission ("SEC").

Important Information Will be Filed with the SEC
This communication may be deemed to be solicitation material in respect of the proposed merger between FNF and Stewart. In connection with the proposed merger, FNF intends to file a registration statement on Form S-4, containing a proxy statement/prospectus with the SEC. STOCKHOLDERS OF STEWART ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT/PROSPECTUS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Investors and security holders will be able to obtain copies of the proxy statement/prospectus as well as other filings containing information about FNF and Stewart, without charge, at the SEC's website, sec.gov. Copies of documents filed with the SEC by FNF will be made available free of charge on FNF's investor relations website. Copies of documents filed with the SEC by Stewart will be made available free of charge on Stewart's investor relations website.

FNF and Stewart, 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, 2017 and its preliminary proxy statement filed on April 19, 2018, which are filed with the SEC.  Information regarding Stewart's directors and executive officers is contained in Stewart's Form 10-K for the year ended December 31, 2017 and its proxy statement filed on April 23, 2018, which are filed with the SEC.  A more complete description will be available in the Registration Statement and the 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.

FNF-E
SOURCE:  Fidelity National Financial, Inc.

 

FIDELITY NATIONAL FINANCIAL, INC.

FIRST QUARTER SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)




Consolidated


Title


Corporate and Other

Three Months Ended




March 31, 2018




Direct title premiums


$

472



$

472



$


Agency title premiums


564



564




Escrow, title related and other fees


618



516



102


Total title and escrow


1,654



1,552



102









Interest and investment income


38



37



1


Realized gains and losses, net


1



1




Total revenue


1,693



1,590



103









Personnel costs


607



579



28


Agent commissions


431



431




Other operating expenses


423



330



93


Depreciation and amortization


47



40



7


Claim loss expense


47



47




Interest expense


11





11


Total expenses


1,566



1,427



139









Pre-tax earnings (loss)


$

127



$

163



$

(36)









Non-GAAP adjustments before taxes







  Realized (gains) and losses, net


(1)



(1)




  Purchase price amortization


29



23



6


  Other adjustments


3



1



2


 Total non-GAAP adjustments before taxes


$

31



$

23



$

8









Adjusted pre-tax earnings (loss)


$

158



$

186



$

(28)


Adjusted pre-tax margin


9.3

%


11.7

%










Pre-tax earnings (loss)


$

127



$

163



$

(36)


  Income tax expense (benefit)


31



40



(9)


  Earnings from equity investments


2



1



1


  Non-controlling interests


1



1











Net earnings (loss) attributable to FNF, Inc. common shareholders


$

97



$

123



$

(26)









EPS attributable to FNF, Inc. common shareholders - basic


$

0.36






EPS attributable to FNF, Inc. common shareholders - diluted


$

0.35













FNF, Inc. weighted average shares - basic


273






FNF, Inc. weighted average shares - diluted


280






 

 

FIDELITY NATIONAL FINANCIAL, INC.

FIRST QUARTER SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)




Consolidated


Title


Corporate and Other

Three Months Ended




March 31, 2018




Net earnings (loss) attributable to FNF, Inc. common shareholders


$

97



$

123



$

(26)









 Total non-GAAP, pre-tax adjustments


$

31



$

23



$

8


  Income taxes on non-GAAP adjustments


(7)



(5)



(2)


  Noncontrolling interest on non-GAAP adjustments


(3)



(3)




Total non-GAAP adjustments


$

21



$

15



$

6









Adjusted net earnings (loss) attributable to FNF, Inc. common shareholders


$

118



$

138



$

(20)









Adjusted EPS attributable to FNF, Inc. common shareholders - diluted


$

0.42













Direct orders opened (000's)


478



478




Direct orders closed (000's)


313



313




Fee per file


$

2,344



$

2,344




Actual title claims paid


$

51



$

51











Cash flows provided by operations


$

18






 

 

 

FIDELITY NATIONAL FINANCIAL, INC.

FIRST QUARTER SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)




Consolidated


Title


Corporate and Other

Three Months Ended




March 31, 2017




Direct title premiums


$

465



$

465



$


Agency title premiums


583



583




Escrow, title related and other fees


571



496



75


Total title and escrow


1,619



1,544



75









Interest and investment income


28



28




Realized gains and losses, net


(4)



(2)



(2)


Total revenue


1,643



1,570



73









Personnel costs


569



548



21


Agent commissions


446



446




Other operating expenses


389



335



54


Depreciation and amortization


43



38



5


Claim loss expense


52



52




Interest expense


16





16


Total expenses


1,515



1,419



96









Pre-tax earnings (loss) from continuing operations


$

128



$

151



$

(23)









Non-GAAP adjustments before taxes







  Realized (gains) and losses, net


4



2



2


  Purchase price amortization


26



22



4


 Total non-GAAP adjustments before taxes


$

30



$

24



$

6









Adjusted pre-tax earnings (loss) from continuing operations


$

158



$

175



$

(17)


Adjusted pre-tax margin from continuing operations


9.6

%


11.1

%










Pre-tax earnings (loss) from continuing operations


$

128



$

151



$

(23)









  Income tax expense (benefit)


69



78



(9)


  Earnings (loss) from equity investments


1



2



(1)


  Earnings from discontinued operations, net of tax


21





21


  Non-controlling interests


9



(1)



10









Net earnings (loss) attributable to FNF, Inc. common shareholders


$

72



$

76



$

(4)









Net earnings attributable to FNFV Group common shareholders


$

1



$



$

1


Net earnings (loss) attributable to FNF Group common shareholders


$

71



$

76



$

(5)


Net earnings (loss) from continuing operations attributable to FNF, Inc. common shareholders


$

61



$

76



$

(15)


EPS attributable to FNF, Inc. common shareholders - basic


$

0.26






EPS attributable to FNF, Inc. common shareholders - diluted


$

0.25






EPS from continuing operations attributable to FNF, Inc. common shareholders - diluted


$

0.22






FNF, Inc. weighted average shares - basic


271






FNF, Inc. weighted average shares - diluted


279






 

 

 

FIDELITY NATIONAL FINANCIAL, INC.

FIRST QUARTER SEGMENT INFORMATION

(In millions, except order information in thousands)

(Unaudited)




Consolidated


Title


Corporate and Other

Three Months Ended




March 31, 2017




Net earnings (loss) attributable to FNF, Inc. common shareholders


$

72



$

76



$

(4)









  Earnings from discontinued operations, net of tax


21





21


  Non-controlling interests of discontinued operations


10





10









Net earnings (loss) from continuing operations attributable to FNF, Inc. common shareholders


$

61



$

76



$

(15)









 Total non-GAAP, pre-tax adjustments


$

30



$

24



$

6


  Income taxes on non-GAAP adjustments


(10)



(8)



(2)


  Noncontrolling interest on non-GAAP adjustments


(3)



(3)




  Nondeductible income taxes on consent order settlement


21



21




Total non-GAAP adjustments


$

38



$

34



$

4









Adjusted net earnings (loss) from continuing operations attributable to FNF, Inc. common shareholders


$

99



$

110



$

(11)









Adjusted EPS from continuing operations attributable to FNF, Inc. common shareholders - diluted


$

0.35













Direct orders opened (000's)


472



472




Direct orders closed (000's)


334



334




Fee per file


$

2,148



$

2,148




Actual title claims paid


$

51



$

51











Cash flows provided by operations


$

4






Cash flows used in operations attributable to FNF Group


$

(11)






Cash flows provided by operations attributable to FNFV Group


$

15







 

 

 

FIDELITY NATIONAL FINANCIAL, INC.

QUARTERLY OPERATING STATISTICS

(Unaudited)




Q1 2018


Q4 2017


Q3 2017


Q2 2017


Q1 2017


Q4 2016


Q3 2016


Q2 2016

Quarterly Open Orders ('000's except % data)

Total open orders*


478



445



501



524



472



474



616



577


Total open orders per day*


7.7



7.2



8.0



8.2



7.6



7.6



9.6



9.0


Purchase % of open orders


66

%


60

%


62

%


66

%


64

%


53

%


50

%


57

%

Refinance % of open orders


34

%


40

%


38

%


34

%


36

%


47

%


50

%


43

%

Total closed orders*


313



357



367



370



334



419



433



401


Total closed orders per day*


5.0



5.8



5.8



5.8



5.4



6.8



6.8



6.3


Purchase % of closed orders


62

%


61

%


65

%


67

%


58

%


51

%


54

%


58

%

Refinance % of closed orders


38

%


39

%


35

%


33

%


42

%


49

%


46

%


42

%


















Commercial (millions, except orders in '000's)

Total commercial revenue


$

230



$

288



$

250



$

261



$

224



$

285



$

233



$

244


Total commercial open orders


52.8



46.3



48.3



50.8



49.4



45.9



50.4



49.9


Total commercial closed orders


31.5



33.2



33.4



33.6



30.0



34.7



31.9



33.6



















National commercial revenue


$

122



$

165



$

138



$

148



$

127



$

167



$

130



$

144


National commercial open orders


21.1



19.0



19.9



22.0



21.1



17.9



20.4



20.3


National commercial closed orders


11.2



12.1



13.1



13.3



11.2



12.8



11.7



11.6



















Total Fee Per File

Fee per file


$

2,344



$

2,425



$

2,368



$

2,428



$

2,148



$

2,091



$

2,015



$

2,116


Residential and local commercial fee per file


$

2,027



$

2,032



$

2,066



$

2,104



$

1,829



$

1,746



$

1,762



$

1,809


Residential fee per file


$

1,789



$

1,784



$

1,856



$

1,895



$

1,623



$

1,538



$

1,594



$

1,645


Total commercial fee per file


$

7,300



$

8,700



$

7,500



$

7,800



$

7,500



$

8,200



$

7,300



$

7,300


National commercial fee per file


$

10,900



$

13,600



$

10,500



$

11,100



$

11,300



$

13,000



$

11,100



$

12,400



















Total Staffing

Total field operations employees


10,900



11,200



11,700



11,300



11,000



11,100



11,400



10,900



















* Includes an immaterial number of non-purchase and non-refinance orders

 

 

FIDELITY NATIONAL FINANCIAL, INC.

SUMMARY BALANCE SHEET INFORMATION

(In millions)




FNF, Inc.

March 31, 2018


FNF, Inc.

December 31, 2017



(Unaudited)


(Unaudited)

Cash and investment portfolio



$

4,371




$

4,481


Goodwill



2,747




2,746


Title plant



398




398


Total assets



9,018




9,151


Notes payable



748




759


Reserve for title claim losses



1,486




1,490


Secured trust deposits



825




830


Redeemable non-controlling interests



344




344


Non-redeemable non-controlling interests



21




20


Total equity and redeemable non-controlling interests



4,823




4,811


Total equity attributable to common shareholders



4,458




4,447


 

 

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SOURCE Fidelity National Financial, Inc.

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